10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended July 3, 2022

or

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ______________ to _______________

Commission file number: 1-2207

THE WENDY’S COMPANY

(Exact name of registrant as specified in its charter)

Delaware		38-0471180
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)
One Dave Thomas Blvd.
Dublin,	Ohio	43017
(Address of principal executive offices)		(Zip Code)

(614) 764-3100

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, $.10 par value	WEN	The Nasdaq Stock Market LLC

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (section 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	☒	Accelerated filer	☐
Non-accelerated filer	☐	Smaller reporting company	☐
		Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes ☐ No ☒

There were 212,803,949 shares of The Wendy’s Company common stock outstanding as of August 3, 2022.

THE WENDY’S COMPANY AND SUBSIDIARIES

INDEX TO FORM 10-Q

	Page
PART I: FINANCIAL INFORMATION
Item 1. Financial Statements	4
Unaudited Condensed Consolidated Balance Sheets as of July 3, 2022 and January 2, 2022	4
Unaudited Condensed Consolidated Statements of Operations for the three and six months ended July 3, 2022 and July 4, 2021	5
Unaudited Condensed Consolidated Statements of Comprehensive Income for the three and six months ended July 3, 2022 and July 4, 2021	6
Unaudited Condensed Consolidated Statements of Stockholders’ Equity for the three and six months ended July 3, 2022 and July 4, 2021	7
Unaudited Condensed Consolidated Statements of Cash Flows for the six months ended July 3, 2022 and July 4, 2021	9
Notes to Condensed Consolidated Financial Statements	10
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	26
Item 3. Quantitative and Qualitative Disclosures about Market Risk	41
Item 4. Controls and Procedures	42
PART II: OTHER INFORMATION	43
Item 1. Legal Proceedings	45
Item 1A. Risk Factors	45
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	45
Item 6. Exhibits	46
Signatures	47

3

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements.

THE WENDY’S COMPANY AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(In Thousands Except Par Value)

	July 3, 2022		January 2, 2022
ASSETS	(Unaudited)
Current assets:
Cash and cash equivalents	$	700,813	$	249,438
Restricted cash	33,997		27,535
Accounts and notes receivable, net	115,367		119,540
Inventories	6,456		5,934
Prepaid expenses and other current assets	35,548		30,584
Advertising funds restricted assets	151,741		159,818
Total current assets	1,043,922		592,849
Properties	890,423		906,867
Finance lease assets	238,878		244,279
Operating lease assets	783,645		812,620
Goodwill	774,703		775,278
Other intangible assets	1,262,762		1,280,791
Investments	50,195		49,870
Net investment in sales-type and direct financing leases	312,376		299,707
Other assets	158,677		139,130
Total assets	$	5,515,581	$	5,101,391
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Current portion of long-term debt	$	29,250	$	24,250
Current portion of finance lease liabilities	17,034		15,513
Current portion of operating lease liabilities	47,482		47,315
Accounts payable	36,156		41,163
Accrued expenses and other current liabilities	112,144		140,783
Advertising funds restricted liabilities	156,757		157,901
Total current liabilities	398,823		426,925
Long-term debt	2,832,790		2,356,416
Long-term finance lease liabilities	567,082		559,587
Long-term operating lease liabilities	823,991		853,328
Deferred income taxes	274,511		267,710
Deferred franchise fees	89,246		88,102
Other liabilities	106,275		112,918
Total liabilities	5,092,718		4,664,986
Commitments and contingencies
Stockholders’ equity:
Common stock, $0.10 par value; 1,500,000 shares authorized;      470,424 shares issued; 212,781 and 215,849 shares outstanding, respectively	47,042		47,042
Additional paid-in capital	2,926,739		2,898,633
Retained earnings	376,187		344,198
Common stock held in treasury, at cost; 257,643 and 254,575 shares, respectively	(2,872,568)		(2,805,268)
Accumulated other comprehensive loss	(54,537)		(48,200)
Total stockholders’ equity	422,863		436,405
Total liabilities and stockholders’ equity	$	5,515,581	$	5,101,391

See accompanying notes to condensed consolidated financial statements.

4

THE WENDY’S COMPANY AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In Thousands Except Per Share Amounts)

	Three Months Ended				Six Months Ended
	July 3, 2022		July 4, 2021		July 3, 2022		July 4, 2021
	(Unaudited)
Revenues:
Sales	$	230,869	$	193,525	$	440,144	$	382,582
Franchise royalty revenue and fees	143,436		136,661		272,412		259,491
Franchise rental income	58,610		60,868		116,481		119,744
Advertising funds revenue	104,868		102,283		197,389		191,723
	537,783		493,337		1,026,426		953,540
Costs and expenses:
Cost of sales	197,285		154,154		382,338		311,004
Franchise support and other costs	9,912		8,885		21,728		16,571
Franchise rental expense	32,076		34,068		61,012		66,634
Advertising funds expense	110,973		107,875		208,773		202,113
General and administrative	61,637		63,114		123,983		115,736
Depreciation and amortization	33,428		30,761		66,659		62,303
System optimization gains, net	(152)		(30,766)		(3,686)		(31,282)
Reorganization and realignment costs	156		2,102		620		7,036
Impairment of long-lived assets	1,860		630		2,476		1,265
Other operating income, net	(5,673)		(4,232)		(8,639)		(7,708)
	441,502		366,591		855,264		743,672
Operating profit	96,281		126,746		171,162		209,868
Interest expense, net	(32,125)		(28,204)		(58,490)		(56,990)
Loss on early extinguishment of debt	—		(17,917)		—		(17,917)
Investment (loss) income, net	(4)		3		2,107		6
Other income, net	1,238		158		1,445		284
Income before income taxes	65,390		80,786		116,224		135,251
Provision for income taxes	(17,239)		(15,062)		(30,671)		(28,161)
Net income	$	48,151	$	65,724	$	85,553	$	107,090
Net income per share:
Basic	$	.23	$	.30	$	.40	$	.48
Diluted	.22		.29		.39		.47

See accompanying notes to condensed consolidated financial statements.

5

THE WENDY’S COMPANY AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(In Thousands)

	Three Months Ended				Six Months Ended
	July 3, 2022		July 4, 2021		July 3, 2022		July 4, 2021
	(Unaudited)
Net income	$	48,151	$	65,724	$	85,553	$	107,090
Other comprehensive (loss) income:
Foreign currency translation adjustment	(7,455)		3,347		(6,337)		5,567
Other comprehensive (loss) income	(7,455)		3,347		(6,337)		5,567
Comprehensive income	$	40,696	$	69,071	$	79,216	$	112,657

See accompanying notes to condensed consolidated financial statements.

6

THE WENDY’S COMPANY AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(In Thousands)

	Common Stock		Additional Paid-In Capital		Retained Earnings		Common Stock Held in Treasury		Accumulated Other Comprehensive Loss		Total
	(Unaudited)
Balance at January 2, 2022	$	47,042	$	2,898,633	$	344,198	$	(2,805,268)	$	(48,200)	$	436,405
Net income	—		—		37,402		—		—		37,402
Other comprehensive income	—		—		—		—		1,118		1,118
Cash dividends	—		—		(26,911)		—		—		(26,911)
Repurchases of common stock, including accelerated share repurchase	—		18,750		—		(18,750)		—		—
Share-based compensation	—		6,348		—		—		—		6,348
Common stock issued upon exercises of stock options	—		237		—		1,354		—		1,591
Common stock issued upon vesting of restricted shares	—		(1,989)		—		459		—		(1,530)
Other	—		63		(8)		57		—		112
Balance at April 3, 2022	$	47,042	$	2,922,042	$	354,681	$	(2,822,148)	$	(47,082)	$	454,535
Net income	—		—		48,151		—		—		48,151
Other comprehensive loss	—		—		—		—		(7,455)		(7,455)
Cash dividends	—		—		(26,635)		—		—		(26,635)
Repurchases of common stock	—		—		—		(51,950)		—		(51,950)
Share-based compensation	—		6,122		—		—		—		6,122
Common stock issued upon exercises of stock options	—		(300)		—		399		—		99
Common stock issued upon vesting of restricted shares	—		(1,178)		—		1,073		—		(105)
Other	—		53		(10)		58		—		101
Balance at July 3, 2022	$	47,042	$	2,926,739	$	376,187	$	(2,872,568)	$	(54,537)	$	422,863

See accompanying notes to condensed consolidated financial statements.

7

THE WENDY’S COMPANY AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY—CONTINUED

(In Thousands)

	Common Stock		Additional Paid-In Capital		Retained Earnings		Common Stock Held in Treasury		Accumulated Other Comprehensive Loss		Total
	(Unaudited)
Balance at January 3, 2021	$	47,042	$	2,899,276	$	238,674	$	(2,585,755)	$	(49,641)	$	549,596
Net income	—		—		41,366		—		—		41,366
Other comprehensive income	—		—		—		—		2,220		2,220
Cash dividends	—		—		(20,156)		—		—		(20,156)
Repurchases of common stock	—		—		—		(56,084)		—		(56,084)
Share-based compensation	—		5,151		—		—		—		5,151
Common stock issued upon exercises of stock options	—		(20)		—		683		—		663
Common stock issued upon vesting of restricted shares	—		(2,996)		—		817		—		(2,179)
Other	—		49		(5)		44		—		88
Balance at April 4, 2021	$	47,042	$	2,901,460	$	259,879	$	(2,640,295)	$	(47,421)	$	520,665
Net income	—		—		65,724		—		—		65,724
Other comprehensive income	—		—		—		—		3,347		3,347
Cash dividends	—		—		(22,123)		—		—		(22,123)
Repurchases of common stock	—		—		—		(27,291)		—		(27,291)
Share-based compensation	—		5,882		—		—		—		5,882
Common stock issued upon exercises of stock options	—		850		—		23,466		—		24,316
Common stock issued upon vesting of restricted shares	—		(959)		—		714		—		(245)
Other	—		41		(5)		45		—		81
Balance at July 4, 2021	$	47,042	$	2,907,274	$	303,475	$	(2,643,361)	$	(44,074)	$	570,356

See accompanying notes to condensed consolidated financial statements.

8

THE WENDY’S COMPANY AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In Thousands)

	Six Months Ended
	July 3, 2022		July 4, 2021
	(Unaudited)
Cash flows from operating activities:
Net income	$	85,553	$	107,090
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	66,659		62,303
Share-based compensation	12,470		11,033
Impairment of long-lived assets	2,476		1,265
Deferred income tax	7,306		(2,137)
Non-cash rental expense, net	16,684		20,075
Change in operating lease liabilities	(22,913)		(23,074)
Net receipt of deferred vendor incentives	5,039		3,332
System optimization gains, net	(3,686)		(31,282)
Distributions received from joint ventures, net of equity in earnings	1,108		2,354
Long-term debt-related activities, net	3,731		21,328
Cloud computing arrangements expenditures	(13,213)		(2,412)
Changes in operating assets and liabilities and other, net	(63,019)		(11,124)
Net cash provided by operating activities	98,195		158,751
Cash flows from investing activities:
Capital expenditures	(30,941)		(24,069)
Franchise development fund	(1,312)		—
Acquisitions	—		4,879
Dispositions	1,016		50,531
Notes receivable, net	2,445		611
Net cash (used in) provided by investing activities	(28,792)		31,952
Cash flows from financing activities:
Proceeds from long-term debt	500,000		1,100,000
Repayments of long-term debt	(12,125)		(941,220)
Repayments of finance lease liabilities	(9,495)		(5,777)
Deferred financing costs	(10,232)		(20,873)
Repurchases of common stock	(51,950)		(83,658)
Dividends	(53,546)		(42,279)
Proceeds from stock option exercises	1,959		25,933
Payments related to tax withholding for share-based compensation	(1,904)		(3,197)
Net cash provided by financing activities	362,707		28,929
Net cash provided by operations before effect of exchange rate changes on cash	432,110		219,632
Effect of exchange rate changes on cash	(2,428)		2,283
Net increase in cash, cash equivalents and restricted cash	429,682		221,915
Cash, cash equivalents and restricted cash at beginning of period	366,966		418,241
Cash, cash equivalents and restricted cash at end of period	$	796,648	$	640,156

See accompanying notes to condensed consolidated financial statements.

9

THE WENDY’S COMPANY AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(In Thousands Except Per Share Amounts)

(1) Basis of Presentation

The accompanying unaudited condensed consolidated financial statements (the “Financial Statements”) of The Wendy’s Company (“The Wendy’s Company” and, together with its subsidiaries, the “Company,” “we,” “us” or “our”) have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information and, therefore, do not include all information and footnotes required by GAAP for complete financial statements. In our opinion, the Financial Statements contain all adjustments of a normal recurring nature necessary to present fairly our financial position as of July 3, 2022, the results of our operations for the three and six months ended July 3, 2022 and July 4, 2021 and cash flows for the six months ended July 3, 2022 and July 4, 2021. The results of operations for the six months ended July 3, 2022 are not necessarily indicative of the results to be expected for the full 2022 fiscal year. The Financial Statements should be read in conjunction with the audited consolidated financial statements for The Wendy’s Company and notes thereto included in our Annual Report on Form 10-K for the fiscal year ended January 2, 2022 (the “Form 10-K”).

In March 2020, the World Health Organization declared the novel strain of coronavirus (“COVID-19”) a global pandemic. We continue to monitor the dynamic nature of the COVID-19 pandemic on our business, results and financial condition; however, we cannot predict the ultimate duration, scope or severity of the COVID-19 pandemic or its ultimate impact on our results of operations, financial condition and prospects.

The principal 100% owned subsidiary of the Company is Wendy’s International, LLC and its subsidiaries (“Wendy’s”). The Company manages and internally reports its business in the following segments: (1) Wendy’s U.S., (2) Wendy’s International and (3) Global Real Estate & Development. See Note 18 for further information.

We report on a fiscal year consisting of 52 or 53 weeks ending on the Sunday closest to or on December 31. All three- and six-month periods presented herein contain 13 weeks and 26 weeks, respectively. All references to years, quarters and months relate to fiscal periods rather than calendar periods.

Our significant interim accounting policies include the recognition of advertising funds expense in proportion to advertising funds revenue.

Reclassifications

The Company has reclassified payments for cloud computing arrangements to “Cloud computing arrangements expenditures,” which were previously recorded to “Changes in operating assets and liabilities and other, net.” The prior period amounts in the condensed consolidated statement of cash flows reflect the reclassification of these cash flows to conform to the current year presentation. There was no impact to “Net cash provided by operating activities.”

The following table illustrates the reclassifications made to the condensed consolidated statement of cash flows for the six months ended July 4, 2021:

	As Previously Reported		Reclassifications		As Currently Reported
Cloud computing arrangements expenditures	$	—	$	(2,412)	$	(2,412)
Changes in operating assets and liabilities and other, net	(13,536)		2,412		(11,124)

10

THE WENDY’S COMPANY AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(In Thousands Except Per Share Amounts)

(2) Revenue

Disaggregation of Revenue

The following tables disaggregate revenue by segment and source:

	Wendy’s U.S.		Wendy’s International		Global Real Estate & Development		Total
Three Months Ended July 3, 2022
Sales at Company-operated restaurants	$	227,903	$	2,966	$	—	$	230,869
Franchise royalty revenue	108,872		16,141		—		125,013
Franchise fees	15,986		1,167		1,270		18,423
Franchise rental income	—		—		58,610		58,610
Advertising funds revenue	97,679		7,189		—		104,868
Total revenues	$	450,440	$	27,463	$	59,880	$	537,783
Six Months Ended July 3, 2022
Sales at Company-operated restaurants	$	434,404	$	5,740	$	—	$	440,144
Franchise royalty revenue	206,792		29,966		—		236,758
Franchise fees	31,391		2,438		1,825		35,654
Franchise rental income	—		—		116,481		116,481
Advertising funds revenue	185,164		12,225		—		197,389
Total revenues	$	857,751	$	50,369	$	118,306	$	1,026,426
Three Months Ended July 4, 2021
Sales at Company-operated restaurants	$	193,279	$	246	$	—	$	193,525
Franchise royalty revenue	106,006		13,560		—		119,566
Franchise fees	14,331		1,454		1,310		17,095
Franchise rental income	—		—		60,868		60,868
Advertising funds revenue	96,227		6,056		—		102,283
Total revenues	$	409,843	$	21,316	$	62,178	$	493,337
Six Months Ended July 4, 2021
Sales at Company-operated restaurants	$	382,336	$	246	$	—	$	382,582
Franchise royalty revenue	202,770		25,130		—		227,900
Franchise fees	26,261		2,897		2,433		31,591
Franchise rental income	—		—		119,744		119,744
Advertising funds revenue	180,430		11,293		—		191,723
Total revenues	$	791,797	$	39,566	$	122,177	$	953,540

11

THE WENDY’S COMPANY AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(In Thousands Except Per Share Amounts)

Contract Balances

The following table provides information about receivables and contract liabilities (deferred franchise fees) from contracts with customers:

	July 3, 2022 (a)		January 2, 2022 (a)
Receivables, which are included in “Accounts and notes receivable, net” (b)	$	57,838	$	49,168
Receivables, which are included in “Advertising funds restricted assets”	66,918		65,497
Deferred franchise fees (c)	99,108		97,186

_______________

(a)Excludes funds collected from the sale of gift cards, which are primarily reimbursed to franchisees upon redemption at franchised restaurants and do not ultimately result in the recognition of revenue in the Company’s condensed consolidated statements of operations.

(b)Includes receivables related to “Sales” and “Franchise royalty revenue and fees.”

(c)Deferred franchise fees are included in “Accrued expenses and other current liabilities” and “Deferred franchise fees” and totaled $9,862 and $89,246, respectively, as of July 3, 2022, and $9,084 and $88,102, respectively, as of January 2, 2022.

Significant changes in deferred franchise fees are as follows:

	Six Months Ended
	July 3, 2022		July 4, 2021
Deferred franchise fees at beginning of period	$	97,186	$	97,785
Revenue recognized during the period	(5,037)		(6,845)
New deferrals due to cash received and other	6,959		7,469
Deferred franchise fees at end of period	$	99,108	$	98,409

Anticipated Future Recognition of Deferred Franchise Fees

The following table reflects the estimated franchise fees to be recognized in the future related to performance obligations that are unsatisfied at the end of the period:

Estimate for fiscal year:
2022 (a)	$	6,831
2023	6,440
2024	6,260
2025	6,084
2026	5,975
Thereafter	67,518
	$	99,108

_______________

(a)Represents franchise fees expected to be recognized for the remainder of 2022, which includes development-related franchise fees expected to be recognized over a duration of one year or less.

12

THE WENDY’S COMPANY AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(In Thousands Except Per Share Amounts)

(3) Acquisitions

The Company completed no significant acquisitions of restaurants from franchisees during the six months ended July 3, 2022 and July 4, 2021.

During 2021, the Company acquired 93 restaurants from a franchisee for total net cash consideration of $127,948. The fair values of the identifiable net assets related to the acquisition were provisional amounts as of January 2, 2022, pending final purchase accounting adjustments. The Company finalized the purchase price allocation during the three months ended April 3, 2022, which resulted in no adjustments to the fair values of the identifiable net assets related to the acquisition.

(4) System Optimization Gains, Net

The Company’s system optimization initiative includes a shift from Company-operated restaurants to franchised restaurants over time, through acquisitions and dispositions, as well as facilitating franchisee-to-franchisee restaurant transfers (“Franchise Flips”). As of January 1, 2017, the Company completed its plan to reduce its ongoing Company-operated restaurant ownership to approximately 5% of the total system. While the Company has no plans to move its ownership away from approximately 5% of the total system, the Company expects to continue to optimize the Wendy’s system through Franchise Flips, as well as evaluating strategic acquisitions of franchised restaurants and strategic dispositions of Company-operated restaurants to existing and new franchisees, to further strengthen the franchisee base, drive new restaurant development and accelerate reimages. During the six months ended July 3, 2022 and July 4, 2021, the Company facilitated 46 and 19 Franchise Flips, respectively. In addition, during the three months ended July 4, 2021, the Company completed the sale of 47 Company-operated restaurants in New York (including Manhattan) to franchisees. No Company-operated restaurants were sold to franchisees during the six months ended July 3, 2022.

Gains and losses recognized on dispositions are recorded to “System optimization gains, net” in our condensed consolidated statements of operations. Costs related to acquisitions and dispositions under our system optimization initiative are recorded to “Reorganization and realignment costs,” which are further described in Note 5. All other costs incurred related to facilitating Franchise Flips are recorded to “Franchise support and other costs.”

The following is a summary of the disposition activity recorded as a result of our system optimization initiative:

	Three Months Ended				Six Months Ended
	July 3, 2022		July 4, 2021		July 3, 2022		July 4, 2021
Number of restaurants sold to franchisees	—		47		—		47
Proceeds from sales of restaurants (a)	$	—	$	50,518	$	—	$	50,518
Net assets sold (b)	—		(16,939)		—		(16,939)
Goodwill related to sales of restaurants	—		(4,847)		—		(4,847)
Net unfavorable leases (c)	—		(2,939)		—		(2,939)
Gain on sales-type leases	—		7,156		—		7,156
Other (d)	—		(2,148)		—		(2,148)
	—		30,801		—		30,801
Post-closing adjustments on sales of restaurants (e)	75		—		3,522		515
Gain on sales of restaurants, net	75		30,801		3,522		31,316
Gain (loss) on sales of other assets, net (f)	77		(35)		164		(34)
System optimization gains, net	$	152	$	30,766	$	3,686	$	31,282

_______________

(a)In addition to the proceeds noted herein, the Company received cash proceeds of $63 and $158 during the three and six months ended July 3, 2022, respectively, related to a note receivable issued in connection with the sale of the Manhattan Company-operated restaurants.

13

THE WENDY’S COMPANY AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(In Thousands Except Per Share Amounts)

(b)Net assets sold consisted primarily of equipment.

(c)During the three and six months ended July 4, 2021, the Company recorded favorable lease assets of $3,799 and unfavorable lease liabilities of $6,738 as a result of leasing and/or subleasing land, buildings and/or leasehold improvements to franchisees, in connection with the sale of the New York Company-operated restaurants (including Manhattan).

(d)The three and six months ended July 4, 2021 include a deferred gain of $3,500 as a result of certain contingencies related to the extension of lease terms.

(e)Represents the recognition of deferred gains as a result of the resolution of certain contingencies related to the extension of lease terms for restaurants previously sold to franchisees.

(f)During the three and six months ended July 3, 2022, the Company received net cash proceeds of $690 and $858, respectively, primarily from the sale of surplus and other properties. During the three and six months ended July 4, 2021, the Company received net cash proceeds of $10 and $13, respectively, primarily from the sale of surplus and other properties.

Assets Held for Sale

As of July 3, 2022 and January 2, 2022, the Company had assets held for sale of $3,754 and $3,541, respectively, primarily consisting of surplus properties. Assets held for sale are included in “Prepaid expenses and other current assets.”

(5) Reorganization and Realignment Costs

The following is a summary of the initiatives included in “Reorganization and realignment costs:”

	Three Months Ended				Six Months Ended
	July 3, 2022		July 4, 2021		July 3, 2022		July 4, 2021
System optimization initiative	$	134	$	897	$	541	$	5,575
Other reorganization and realignment plans	22		1,205		79		1,461
Reorganization and realignment costs	$	156	$	2,102	$	620	$	7,036

System Optimization Initiative

The Company recognizes costs related to acquisitions and dispositions under its system optimization initiative. During the six months ended July 3, 2022, the Company recognized costs totaling $541, which were primarily comprised of professional fees and other costs associated with the Company’s acquisition of 93 franchise-operated restaurants in Florida during the fourth quarter of 2021. During the six months ended July 4, 2021, the Company recognized costs totaling $5,575, which were primarily comprised of the write-off of certain lease assets and lease termination fees associated with the bankruptcy sale process of NPC Quality Burgers, Inc. (“NPC”). As previously announced, NPC, formerly the Company’s largest franchisee, filed for chapter 11 bankruptcy in July 2020 and completed a process during the three months ended April 4, 2021 under which all of NPC’s Wendy’s restaurants were sold to Wendy’s approved franchisees. The Company expects to recognize a gain of approximately $700, primarily related to the write-off of certain NPC-related lease liabilities, upon final termination of the leases.

14

THE WENDY’S COMPANY AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(In Thousands Except Per Share Amounts)

The following is a summary of the costs recorded as a result of our system optimization initiative:

	Three Months Ended				Six Months Ended				Total Incurred Since Inception
	July 3, 2022		July 4, 2021		July 3, 2022		July 4, 2021
Severance and related employee costs	$	—	$	661	$	—	$	661	$	18,898
Professional fees	80		504		374		739		24,051
Other (a)	37		—		133		1,354		7,751
	117		1,165		507		2,754		50,700
Accelerated depreciation and amortization (b)	—		—		—		—		25,398
NPC lease termination costs (c)	17		(268)		34		2,821		2,890
Share-based compensation (d)	—		—		—		—		5,013
Total system optimization initiative	$	134	$	897	$	541	$	5,575	$	84,001

_______________

(a)The six months ended July 4, 2021 includes transaction fees of $1,350 associated with the NPC bankruptcy sale process.

(b)Primarily includes accelerated amortization of previously acquired franchise rights related to the Company-operated restaurants in territories that have been sold to franchisees in connection with our system optimization initiative.

(c)The six months ended July 4, 2021 includes the write-off of lease assets of $1,341 and lease termination fees paid of $1,480.

(d)Represents incremental share-based compensation resulting from the modification of stock options and performance-based awards in connection with the termination of employees under our system optimization initiative.

The tables below present a rollforward of our accruals for our system optimization initiative, which were included in “Accrued expenses and other current liabilities” as of January 3, 2021.

	Balance January 2, 2022		Charges		Payments		Balance July 3, 2022
Professional fees	$	—	$	374	$	(374)	$	—
Other	—		133		(133)		—
	$	—	$	507	$	(507)	$	—

	Balance January 3, 2021		Charges		Payments		Balance July 4, 2021
Severance and related employee costs	$	—	$	661	$	(661)	$	—
Professional fees	1,230		739		(1,969)		—
Other	—		1,354		(1,354)		—
	$	1,230	$	2,754	$	(3,984)	$	—

Other Reorganization and Realignment Plans

Costs incurred under the Company’s other reorganization and realignment plans were not material during the six months ended July 3, 2022 and July 4, 2021. The Company does not expect to incur any material additional costs under these plans.

15

THE WENDY’S COMPANY AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(In Thousands Except Per Share Amounts)

(6) Investments

The following is a summary of the carrying value of our investments:

	July 3, 2022		January 2, 2022
Equity method investments	$	38,088	$	39,870
Other investments in equity securities	12,107		10,000
	$	50,195	$	49,870

Equity Method Investments

Wendy’s has a 50% share in a partnership in a Canadian restaurant real estate joint venture (“TimWen”) with a subsidiary of Restaurant Brands International Inc., a quick-service restaurant company that owns the Tim Hortons® brand (Tim Hortons is a registered trademark of Tim Hortons USA Inc.). In addition, the Company has a 20% share in a joint venture in Brazil (the “Brazil JV”). The Company has significant influence over these investees. Such investments are accounted for using the equity method, under which our results of operations include our share of the income (loss) of the investees in “Other operating income, net.”

Presented below is activity related to our investment in TimWen and the Brazil JV included in our condensed consolidated financial statements:

	Six Months Ended
	July 3, 2022		July 4, 2021
Balance at beginning of period	$	39,870	$	44,574
Equity in earnings for the period	5,736		4,921
Amortization of purchase price adjustments (a)	(1,455)		(1,658)
	4,281		3,263
Distributions received	(5,389)		(5,617)
Foreign currency translation adjustment included in “Other comprehensive (loss) income” and other	(674)		1,456
Balance at end of period	$	38,088	$	43,676

_______________

(a)Purchase price adjustments that impacted the carrying value of the Company’s investment in TimWen are being amortized over the average original aggregate life of 21 years.

Other Investments in Equity Securities

During 2021, the Company made an investment in equity securities of $10,000. During the six months ended July 3, 2022, the Company recognized a gain of $2,107 as a result of an observable price change for a similar investment of the same issuer.

16

THE WENDY’S COMPANY AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(In Thousands Except Per Share Amounts)

(7) Long-Term Debt

Long-term debt consisted of the following:

	July 3, 2022		January 2, 2022
Series 2022-1 Class A-2 Notes:
4.236% Series 2022-1 Class A-2-I Notes, anticipated repayment date 2029	$	100,000	$	—
4.535% Series 2022-1 Class A-2-II Notes, anticipated repayment date 2032	400,000		—
Series 2021-1 Class A-2 Notes:
2.370% Series 2021-1 Class A-2-I Notes, anticipated repayment date 2029	445,500		447,750
2.775% Series 2021-1 Class A-2-II Notes, anticipated repayment date 2031	643,500		646,750
Series 2019-1 Class A-2 Notes:
3.783% Series 2019-1 Class A-2-I Notes, anticipated repayment date 2026	366,000		368,000
4.080% Series 2019-1 Class A-2-II Notes, anticipated repayment date 2029	411,750		414,000
Series 2018-1 Class A-2 Notes:
3.884% Series 2018-1 Class A-2-II Notes, anticipated repayment date 2028	453,625		456,000
7% debentures, due in 2025	85,770		85,175
Unamortized debt issuance costs	(44,105)		(37,009)
	2,862,040		2,380,666
Less amounts payable within one year	(29,250)		(24,250)
Total long-term debt	$	2,832,790	$	2,356,416

Senior Notes

Wendy’s Funding, LLC, a limited-purpose, bankruptcy-remote, wholly-owned indirect subsidiary of The Wendy’s Company, is the master issuer (the “Master Issuer”) of outstanding senior secured notes under a securitized financing facility that was entered into in June 2015. On April 1, 2022, the Master Issuer completed a financing transaction with respect to this facility under which the Master Issuer issued fixed rate senior secured notes in the following 2022-1 series: Class A-2-I with an initial principal amount of $100,000 and Class A-2-II with an initial principal amount of $400,000 (collectively, the “Series 2022-1 Class A-2 Notes”). Interest and principal payments on the Series 2022-1 Class A-2 Notes are payable on a quarterly basis. The legal final maturity date of the Series 2022-1 Class A-2 Notes is March 2052. If the Master Issuer has not repaid or refinanced the Series 2022-1 Class A-2 Notes prior to their respective anticipated repayment dates, additional interest will accrue pursuant to the indenture governing the Series 2022-1 Class A-2 Notes. The net proceeds from the sale of the Series 2022-1 Class A-2 Notes will be used for general corporate purposes, which may include funding for growth initiatives, return of capital to shareholders and debt retirement. The Series 2022-1 Class A-2 Notes have scheduled principal payments of $2,500 in 2022, $5,000 annually from 2023 through 2028, $97,500 in 2029, $4,000 annually from 2030 through 2031 and $362,000 in 2032.

The Series 2022-1 Class A-2 Notes are secured by a security interest in substantially all of the assets of the Master Issuer and certain other limited-purpose, bankruptcy-remote, wholly-owned indirect subsidiaries of the Company that act as guarantors, except for certain real estate assets and subject to certain limitations. The Series 2022-1 Class A-2 Notes are subject to substantially the same series of covenants and restrictions as the Company’s outstanding Series 2021-1 Class A-2 Notes, Series 2019-1 Class A-2 Notes and Series 2018-1 Class A-2 Notes.

Under the securitized financing facility, the Master Issuer has issued outstanding Series 2021-1 Variable Funding Senior Secured Notes, Class A-1 (the “Class A-1 Notes”), which allow for the drawing of up to $300,000 on a revolving basis using various credit instruments, including a letter of credit facility. No amounts were borrowed under the Class A-1 Notes during the six months ended July 3, 2022.

During the six months ended July 3, 2022, the Company incurred debt issuance costs of $10,232 in connection with the issuance of the Series 2022-1 Class A-2 Notes. The debt issuance costs will be amortized to “Interest expense, net” through the anticipated repayment dates of the Series 2022-1 Class A-2 Notes utilizing the effective interest rate method.

17

THE WENDY’S COMPANY AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(In Thousands Except Per Share Amounts)

(8) Fair Value Measurements

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Valuation techniques under the accounting guidance related to fair value measurements are based on observable and unobservable inputs. Observable inputs reflect readily obtainable data from independent sources, while unobservable inputs reflect our market assumptions. These inputs are classified into the following hierarchy:

•Level 1 Inputs - Quoted prices for identical assets or liabilities in active markets.

•Level 2 Inputs - Quoted prices for similar assets or liabilities in active markets; quoted prices for identical or similar assets or liabilities in markets that are not active; and model-derived valuations whose inputs are observable or whose significant value drivers are observable.

•Level 3 Inputs - Pricing inputs are unobservable for the assets or liabilities and include situations where there is little, if any, market activity for the assets or liabilities. The inputs into the determination of fair value require significant management judgment or estimation.

Financial Instruments

The following table presents the carrying amounts and estimated fair values of the Company’s financial instruments:

	July 3, 2022				January 2, 2022
	Carrying Amount		Fair Value		Carrying Amount		Fair Value		Fair Value Measurements
Financial assets
Cash equivalents	$	415,679	$	415,679	$	—	$	—	Level 1
Other investments in equity securities (a)	12,107		12,107		10,000		10,000		Level 2
Financial liabilities
Series 2022-1 Class A-2-I Notes (b)	100,000		94,800		—		—		Level 2
Series 2022-1 Class A-2-II Notes (b)	400,000		376,000		—		—		Level 2
Series 2021-1 Class A-2-I Notes (b)	445,500		379,254		447,750		439,283		Level 2
Series 2021-1 Class A-2-II Notes (b)	643,500		533,912		646,750		642,352		Level 2
Series 2019-1 Class A-2-I Notes (b)	366,000		348,322		368,000		381,579		Level 2
Series 2019-1 Class A-2-II Notes (b)	411,750		384,122		414,000		439,792		Level 2
Series 2018-1 Class A-2-II Notes (b)	453,625		426,816		456,000		473,693		Level 2
7% debentures, due in 2025 (b)	85,770		91,467		85,175		101,142		Level 2

_______________

(a)The fair value of our other investments in equity securities is based on our review of information provided by the investment manager, which is based on observable price changes in orderly transactions for a similar investment of the same issuer.

(b)The fair values were based on quoted market prices in markets that are not considered active markets.

The carrying amounts of cash, accounts payable and accrued expenses approximate fair value due to the short-term nature of those items. The carrying amounts of accounts and notes receivable, net (both current and non-current) approximate fair value due to the effect of the related allowance for doubtful accounts. Our cash equivalents are the only financial assets measured and recorded at fair value on a recurring basis.

18

THE WENDY’S COMPANY AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(In Thousands Except Per Share Amounts)

Non-Recurring Fair Value Measurements

Assets and liabilities remeasured to fair value on a non-recurring basis resulted in impairment that we have recorded to “Impairment of long-lived assets” in our condensed consolidated statements of operations.

Total impairment losses may reflect the impact of remeasuring long-lived assets held and used (including land, buildings, leasehold improvements, favorable lease assets and right-of-use assets) to fair value as a result of (1) declines in operating performance at Company-operated restaurants and (2) the Company’s decision to lease and/or sublease the land and/or buildings to franchisees in connection with the sale or anticipated sale of restaurants, including any subsequent lease modifications. The fair values of long-lived assets held and used presented in the tables below represent the remaining carrying value and were estimated based on either discounted cash flows of future anticipated lease and sublease income or discounted cash flows of future anticipated Company-operated restaurant performance.

Total impairment losses may also include the impact of remeasuring long-lived assets held for sale. The fair values of long-lived assets held for sale presented in the tables below represent the remaining carrying value and were estimated based on current market values. See Note 9 for further information on impairment of our long-lived assets.

			Fair Value Measurements
	July 3, 2022		Level 1		Level 2		Level 3
Held and used	$	952	$	—	$	—	$	952
Held for sale	2,275		—		—		2,275
Total	$	3,227	$	—	$	—	$	3,227

			Fair Value Measurements
	January 2, 2022		Level 1		Level 2		Level 3
Held and used	$	1,618	$	—	$	—	$	1,618
Held for sale	371		—		—		371
Total	$	1,989	$	—	$	—	$	1,989

(9) Impairment of Long-Lived Assets

The Company records impairment charges as a result of (1) the deterioration in operating performance of certain Company-operated restaurants, (2) the Company’s decision to lease and/or sublease properties to franchisees in connection with the sale or anticipated sale of Company-operated restaurants, including any subsequent lease modifications, and (3) closing Company-operated restaurants and classifying such surplus properties as held for sale.

The following is a summary of impairment losses recorded, which represent the excess of the carrying amount over the fair value of the affected assets and are included in “Impairment of long-lived assets:”

	Three Months Ended				Six Months Ended
	July 3, 2022		July 4, 2021		July 3, 2022		July 4, 2021
Company-operated restaurants	$	1,708	$	488	$	2,075	$	934
Restaurants leased or subleased to franchisees	—		—		194		189
Surplus properties	152		142		207		142
	$	1,860	$	630	$	2,476	$	1,265

(10) Income Taxes

The Company’s effective tax rate for the three months ended July 3, 2022 and July 4, 2021 was 26.4% and 18.6%, respectively. The Company’s effective tax rate varied from the U.S. federal statutory rate of 21% for the three months ended July 3, 2022 primarily due to state income taxes.

19

THE WENDY’S COMPANY AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(In Thousands Except Per Share Amounts)

The Company’s effective tax rate for the six months ended July 3, 2022 and July 4, 2021 was 26.4% and 20.8%, respectively. The Company’s effective tax rate varied from the U.S. federal statutory rate of 21% for the six months ended July 3, 2022 primarily due to state income taxes.

There were no significant changes to the unrecognized tax benefits or related interest and penalties for the three and six months ended July 3, 2022. During the next twelve months, we believe it is reasonably possible the Company will reduce unrecognized tax benefits by up to $936 due to lapses of statutes of limitations.

The current portion of refundable income taxes was $8,266 and $11,901 as of July 3, 2022 and January 2, 2022, respectively, and is included in “Accounts and notes receivable, net.” There were no long-term refundable income taxes as of July 3, 2022 and January 2, 2022.

(11) Net Income Per Share

The calculation of basic and diluted net income per share was as follows:

	Three Months Ended				Six Months Ended
	July 3, 2022		July 4, 2021		July 3, 2022		July 4, 2021
Net income	$	48,151	$	65,724	$	85,553	$	107,090
Common stock:
Weighted average basic shares outstanding	213,673		221,874		214,646		222,604
Dilutive effect of stock options and restricted shares	1,569		3,526		2,058		3,459
Weighted average diluted shares outstanding	215,242		225,400		216,704		226,063
Net income per share:
Basic	$	.23	$	.30	$	.40	$	.48
Diluted	$	.22	$	.29	$	.39	$	.47

Basic net income per share for the three and six months ended July 3, 2022 and July 4, 2021 was computed by dividing net income amounts by the weighted average number of shares of common stock outstanding. Diluted net income per share was computed by dividing net income by the weighted average number of basic shares outstanding plus the potential common share effect of dilutive stock options and restricted shares. We excluded potential common shares of 5,538 and 4,417 for the three and six months ended July 3, 2022, respectively, and 1,825 and 1,847 for the three and six months ended July 4, 2021, respectively, from our diluted net income per share calculation as they would have had anti-dilutive effects.

(12) Stockholders’ Equity

Dividends

During each of the first and second quarters of 2022, the Company paid quarterly dividends per share of $.125. During the first and second quarters of 2021, the Company paid dividends per share of $.09 and $.10, respectively.

Repurchases of Common Stock

In February 2022, our Board of Directors authorized a repurchase program for up to $100,000 of our common stock through February 28, 2023, when and if market conditions warrant and to the extent legally permissible (the “February 2022 Authorization”). On April 1, 2022, the Company’s Board of Directors approved an increase of $150,000 to the February 2022 Authorization, resulting in an aggregate authorization of $250,000 that continues to expire on February 28, 2023. During the six months ended July 3, 2022, the Company repurchased 2,759 shares under the February 2022 Authorization with an aggregate purchase price of $51,911, excluding commissions of $39. As of July 3, 2022, the Company had $198,089 of

20

THE WENDY’S COMPANY AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(In Thousands Except Per Share Amounts)

availability remaining under its February 2022 authorization. Subsequent to July 3, 2022 through August 9, 2022, no shares were repurchased under the February 2022 Authorization.

In February 2020, our Board of Directors authorized a repurchase program for up to $100,000 of our common stock through February 28, 2021, when and if market conditions warranted and to the extent legally permissible (the “February 2020 Authorization”). In July 2020, the Company’s Board of Directors approved an extension of the February 2020 Authorization by one year, through February 28, 2022. In addition, in May 2021, August 2021 and November 2021, the Board of Directors approved increases of $50,000, $70,000 and $80,000, respectively, to the February 2020 Authorization, resulting in an aggregate authorization of $300,000 that continued to expire on February 28, 2022. In November 2021, the Company entered into an accelerated share repurchase agreement (the “2021 ASR Agreement”) with a third-party financial institution to repurchase common stock as part of the February 2020 Authorization. Under the 2021 ASR Agreement, the Company paid the financial institution an initial purchase price of $125,000 in cash and received an initial delivery of 4,910 shares of common stock, representing an estimated 85% of the total shares expected to be delivered under the 2021 ASR Agreement. In February 2022, the Company completed the 2021 ASR Agreement and received an additional 715 shares of common stock. The total number of shares of common stock ultimately purchased by the Company under the 2021 ASR Agreement was based on the average of the daily volume-weighted average prices of the common stock during the term of the 2021 ASR Agreement, less an agreed upon discount. In total, 5,625 shares were delivered under the 2021 ASR Agreement at an average purchase price of $22.22 per share. With the completion of the 2021 ASR Agreement in February 2022 as described above, the Company completed the February 2020 Authorization.

During the six months ended July 4, 2021, the Company repurchased 3,956 shares under the February 2020 Authorization with an aggregate purchase price of $83,320, of which $440 was accrued at July 4, 2021, and excluding commissions of $55.

Accumulated Other Comprehensive Loss

The following table provides a rollforward of accumulated other comprehensive loss, which is entirely comprised of foreign currency translation:

	Six Months Ended
	July 3, 2022		July 4, 2021
Balance at beginning of period	$	(48,200)	$	(49,641)
Foreign currency translation	(6,337)		5,567
Balance at end of period	$	(54,537)	$	(44,074)

(13) Leases

Nature of Leases

The Company operates restaurants that are located on sites owned by us and sites leased by us from third parties. In addition, the Company owns sites and leases sites from third parties, which it leases and/or subleases to franchisees. At July 3, 2022, Wendy’s and its franchisees operated 7,040 Wendy’s restaurants. Of the 411 Company-operated Wendy’s restaurants, Wendy’s owned the land and building for 157 restaurants, owned the building and held long-term land leases for 143 restaurants and held leases covering the land and building for 111 restaurants. Wendy’s also owned 489 and leased 1,211 properties that were either leased or subleased principally to franchisees. The Company also leases restaurant, office and transportation equipment.

21

THE WENDY’S COMPANY AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(In Thousands Except Per Share Amounts)

Company as Lessee

The components of lease cost are as follows:

	Three Months Ended				Six Months Ended
	July 3, 2022		July 4, 2021		July 3, 2022		July 4, 2021
Finance lease cost:
Amortization of finance lease assets	$	4,106	$	3,251	$	8,170	$	6,759
Interest on finance lease liabilities	10,693		10,267		21,338		20,560
	14,799		13,518		29,508		27,319
Operating lease cost	22,324		23,012		42,985		46,373
Variable lease cost (a)	16,456		16,583		31,259		31,771
Short-term lease cost	1,405		1,270		2,838		2,596
Total operating lease cost (b)	40,185		40,865		77,082		80,740
Total lease cost	$	54,984	$	54,383	$	106,590	$	108,059

_______________

(a)Includes expenses for executory costs of $9,245 and $10,087 for the three months ended July 3, 2022 and July 4, 2021, respectively, and $18,853 and $20,150 for the six months ended July 3, 2022 and July 4, 2021, respectively, for which the Company is reimbursed by sublessees.

(b)Includes $32,071 and $34,063 for the three months ended July 3, 2022 and July 4, 2021, respectively, and $60,996 and $66,615 for the six months ended July 3, 2022 and July 4, 2021, respectively, recorded to “Franchise rental expense” for leased properties that are subsequently leased to franchisees. Also includes $7,479 and $6,111 for the three months ended July 3, 2022 and July 4, 2021, respectively, and $14,773 and $12,792 for the six months ended July 3, 2022 and July 4, 2021, respectively, recorded to “Cost of sales” for leases for Company-operated restaurants.

Company as Lessor

The components of lease income are as follows:

	Three Months Ended				Six Months Ended
	July 3, 2022		July 4, 2021		July 3, 2022		July 4, 2021
Sales-type and direct-financing leases:
Selling profit	$	1,677	$	1,627	$	2,157	$	3,539
Interest income (a)	7,753		7,586		15,493		15,075
Operating lease income	42,174		44,356		85,488		88,478
Variable lease income	16,436		16,512		30,993		31,266
Franchise rental income (b)	$	58,610	$	60,868	$	116,481	$	119,744

_______________

(a)Included in “Interest expense, net.”

(b)Includes sublease income of $43,689 and $45,245 recognized during the three months ended July 3, 2022 and July 4, 2021, respectively, and $86,854 and $88,495 recognized during the six months ended July 3, 2022 and July 4, 2021, respectively. Sublease income includes lessees’ variable payments to the Company for executory costs of $9,250 and $10,195 for the three months ended July 3, 2022 and July 4, 2021, respectively, and $18,785 and $20,069 for the six months ended July 3, 2022 and July 4, 2021, respectively.

22

THE WENDY’S COMPANY AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(In Thousands Except Per Share Amounts)

(14) Supplemental Cash Flow Information

The following table includes supplemental non-cash investing and financing activities:

	Six Months Ended
	July 3, 2022		July 4, 2021
Supplemental non-cash investing and financing activities:
Capital expenditures included in accounts payable	$	5,955	$	7,242
Finance leases	18,984		30,863

The following table includes a reconciliation of cash, cash equivalents and restricted cash:

	July 3, 2022		January 2, 2022
Reconciliation of cash, cash equivalents and restricted cash at end of period:
Cash and cash equivalents	$	700,813	$	249,438
Restricted cash	33,997		27,535
Restricted cash, included in Advertising funds restricted assets	61,838		89,993
Total cash, cash equivalents and restricted cash	$	796,648	$	366,966

Franchise Development Fund

In August 2021, the Company announced the creation of a $100,000 strategic build to suit development fund to drive additional new restaurant growth. The Company expects the development fund to drive approximately 80 to 90 new franchise restaurants from 2022 to 2025. Capital expenditures related to the fund are included in “Franchise development fund” in the condensed consolidated statements of cash flows.

(15) Transactions with Related Parties

Except as described below, the Company did not have any significant changes in or transactions with its related parties during the current fiscal period since those reported in the Form 10-K.

TimWen Lease and Management Fee Payments

A wholly-owned subsidiary of Wendy’s leases restaurant facilities from TimWen, which are then subleased to franchisees for the operation of Wendy’s/Tim Hortons combo units in Canada. During the six months ended July 3, 2022 and July 4, 2021, Wendy’s paid TimWen $9,601 and $8,817, respectively, under these lease agreements. In addition, TimWen paid Wendy’s a management fee under the TimWen joint venture agreement of $111 and $110 during the six months ended July 3, 2022 and July 4, 2021, respectively, which has been included as a reduction to “General and administrative.”

Transactions with Yellow Cab

Certain family members and affiliates of Mr. Nelson Peltz, our Chairman, and Mr. Peter May, our Senior Vice Chairman, as well as Mr. Matthew Peltz, our Vice Chairman, hold indirect, minority ownership interests in Yellow Cab Holdings, LLC (“Yellow Cab”) and operating companies managed by Yellow Cab, a Wendy’s franchisee, that as of July 3, 2022 owned and operated 82 Wendy’s restaurants. During the six months ended July 3, 2022 and July 4, 2021, the Company recognized $6,476 and $4,353, respectively, in royalty, advertising fund, lease and other income from Yellow Cab and related entities. As of July 3, 2022 and January 2, 2022, $1,046 and $974, respectively, was due from Yellow Cab for such income, which is included in “Accounts and notes receivable, net” and “Advertising funds restricted assets.”

23

THE WENDY’S COMPANY AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(In Thousands Except Per Share Amounts)

(16) Guarantees and Other Commitments and Contingencies

Except as described below, the Company did not have any significant changes in guarantees and other commitments and contingencies during the current fiscal period since those reported in the Form 10-K. Refer to the Form 10-K for further information regarding the Company’s additional commitments and obligations.

Lease Guarantees

Wendy’s has guaranteed the performance of certain leases and other obligations, primarily from former Company-operated restaurant locations now operated by franchisees, amounting to $88,778 as of July 3, 2022. These leases extend through 2045. We have had no judgments against us as guarantor of these leases as of July 3, 2022. In the event of default by a franchise owner where Wendy’s is called upon to perform under its guarantee, Wendy’s has the ability to pursue repayment from the franchise owner. The liability recorded for our probable exposure associated with these lease guarantees was not material as of July 3, 2022.

Letters of Credit

As of July 3, 2022, the Company had outstanding letters of credit with various parties totaling $28,633. Substantially all of the outstanding letters of credit include amounts outstanding against the 2021-1 Class A-1 Notes. See Note 7 for further information. We do not expect any material loss to result from these letters of credit.

(17) Legal and Environmental Matters

The Company is involved in litigation and claims incidental to our business. We provide accruals for such litigation and claims when payment is probable and reasonably estimable. We believe we have adequate accruals for all of our legal and environmental matters. We cannot estimate the aggregate possible range of loss for our existing litigation and claims for various reasons, including, but not limited to, many proceedings being in preliminary stages, with various motions either yet to be submitted or pending, discovery yet to occur and/or significant factual matters unresolved. In addition, most cases seek an indeterminate amount of damages and many involve multiple parties. Predicting the outcomes of settlement discussions or judicial or arbitral decisions is thus inherently difficult and future developments could cause these actions or claims, individually or in aggregate, to have a material adverse effect on the Company’s financial condition, results of operations, or cash flows of a particular reporting period.

We previously described certain legal proceedings in the Form 10-K. As of July 3, 2022, there were no material developments in those legal proceedings.

(18) Segment Information

Revenues by segment were as follows:

	Three Months Ended				Six Months Ended
	July 3, 2022		July 4, 2021		July 3, 2022		July 4, 2021
Wendy’s U.S.	$	450,440	$	409,843	$	857,751	$	791,797
Wendy’s International	27,463		21,316		50,369		39,566
Global Real Estate & Development	59,880		62,178		118,306		122,177
Total revenues	$	537,783	$	493,337	$	1,026,426	$	953,540

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THE WENDY’S COMPANY AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(In Thousands Except Per Share Amounts)

The following table reconciles profit by segment to the Company’s consolidated income before income taxes:

	Three Months Ended				Six Months Ended
	July 3, 2022		July 4, 2021		July 3, 2022		July 4, 2021
Wendy’s U.S. (a)	$	126,999	$	126,650	$	231,823	$	238,737
Wendy’s International (b)	9,350		6,528		14,803		14,212
Global Real Estate & Development	27,283		26,569		54,890		52,822
Total segment profit	$	163,632	$	159,747	$	301,516	$	305,771
Unallocated franchise support and other costs	—		—		6		—
Advertising funds deficit	(1,375)		(1,602)		(2,618)		(2,866)
Unallocated general and administrative (c)	(30,989)		(28,864)		(61,994)		(53,971)
Depreciation and amortization	(33,428)		(30,761)		(66,659)		(62,303)
System optimization gains, net	152		30,766		3,686		31,282
Reorganization and realignment costs	(156)		(2,102)		(620)		(7,036)
Impairment of long-lived assets	(1,860)		(630)		(2,476)		(1,265)
Unallocated other operating income, net	305		192		321		256
Interest expense, net	(32,125)		(28,204)		(58,490)		(56,990)
Loss on early extinguishment of debt	—		(17,917)		—		(17,917)
Investment (loss) income, net	(4)		3		2,107		6
Other income, net	1,238		158		1,445		284
Income before income taxes	$	65,390	$	80,786	$	116,224	$	135,251

_______________

(a)Wendy’s U.S. includes advertising fund expense of $2,766 and $5,322 for the three and six months ended July 3, 2022, respectively, and $3,990 and $7,524 for the three and six months ended July 4, 2021, respectively, related to the Company’s funding of incremental advertising.

(b)Wendy’s International includes advertising fund expense of $1,084 and $1,922 for the three and six months ended July 3, 2022, respectively, related to the Company’s funding of incremental advertising. In addition, Wendy’s International includes other international-related advertising expense of $880 and $1,522 for the three and six months ended July 3, 2022, respectively.

(c)Includes corporate overhead costs, such as employee compensation and related benefits.

(19) New Accounting Standards

Financial Instruments

In August 2020, the Financial Accounting Standards Board (“FASB”) issued an amendment that simplifies the accounting for certain financial instruments with characteristics of liabilities and equity, including convertible instruments and contracts on an entity’s own equity. The amendment simplifies accounting for convertible instruments by removing major separation models required under current accounting guidance. In addition, the amendment removes certain settlement conditions that are required for equity contracts to qualify for the derivative scope exception, which will permit more equity contracts to qualify for the exception, and also simplifies the diluted earnings per share calculation in certain areas. The Company adopted this amendment during the first quarter of 2022. The adoption of this guidance did not have a material impact on our condensed consolidated financial statements.

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Item 2.  Management’s Discussion and Analysis of Financial Condition and Results of Operations.

Introduction

This “Management’s Discussion and Analysis of Financial Condition and Results of Operations” of The Wendy’s Company (“The Wendy’s Company” and, together with its subsidiaries, the “Company,” “we,” “us,” or “our”) should be read in conjunction with the accompanying unaudited condensed consolidated financial statements and the related notes included elsewhere within this report and “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K for the fiscal year ended January 2, 2022 (the “Form 10-K”). There have been no material changes as of July 3, 2022 to the application of our critical accounting policies as described in Item 7 of the Form 10-K. Certain statements we make under this Item 2 constitute “forward-looking statements” under the Private Securities Litigation Reform Act of 1995. See “Special Note Regarding Forward-Looking Statements and Projections” in “Part II. Other Information” of this report. You should consider our forward-looking statements in light of the risks discussed in “Item 1A. Risk Factors” in “Part II. Other Information” of this report and our unaudited condensed consolidated financial statements, related notes and other financial information appearing elsewhere in this report, the Form 10-K and our other filings with the Securities and Exchange Commission (the “SEC”).

The Wendy’s Company is the parent company of its 100% owned subsidiary holding company, Wendy’s Restaurants, LLC (“Wendy’s Restaurants”). Wendy’s Restaurants is the parent company of Wendy’s International, LLC (formerly known as Wendy’s International, Inc). Wendy’s International, LLC is the indirect parent company of (1) Quality Is Our Recipe, LLC (“Quality”), which is the owner and franchisor of the Wendy’s restaurant system in the United States (the “U.S.”) and all international jurisdictions except for Canada, and (2) Wendy’s Restaurants of Canada Inc., which is the owner and franchisor of the Wendy’s restaurant system in Canada. As used herein, unless the context requires otherwise, the term “Company” refers to The Wendy’s Company and its direct and indirect subsidiaries, and “Wendy’s” refers to Quality when the context relates to the ownership or franchising of the Wendy’s restaurant system and to Wendy’s International, LLC when the context refers to the Wendy’s brand.

Wendy’s is primarily engaged in the business of operating, developing and franchising a system of distinctive quick-service restaurants serving high quality food. Wendy’s opened its first restaurant in Columbus, Ohio in 1969. Today, Wendy’s is the second largest quick-service restaurant company in the hamburger sandwich segment in the U.S. based on traffic share, and the third largest globally with 7,040 restaurants in the U.S. and 31 foreign countries and U.S. territories as of July 3, 2022.

Each Wendy’s restaurant offers an extensive menu specializing in hamburger sandwiches and featuring filet of chicken breast sandwiches, which are prepared to order with the customer’s choice of toppings and condiments. Wendy’s menu also includes chicken nuggets, chili, french fries, baked potatoes, freshly prepared salads, soft drinks, Frosty® desserts and kids’ meals. In addition, Wendy’s restaurants sell a variety of promotional products on a limited time basis. Wendy’s also offers breakfast across the U.S. system and in Canada. Wendy’s breakfast menu features a variety of breakfast sandwiches such as the Breakfast Baconator®, sides such as seasoned potatoes, and a beverage platform that includes our vanilla and chocolate Frosty-ccinoTM iced coffee.

The Company is comprised of the following segments: (1) Wendy’s U.S., (2) Wendy’s International and (3) Global Real Estate & Development. Wendy’s U.S. includes the operation and franchising of Wendy’s restaurants in the U.S. and derives its revenues from sales at Company-operated restaurants and royalties, fees and advertising fund collections from franchised restaurants. Wendy’s International includes the operation and franchising of Wendy’s restaurants in countries and territories other than the U.S. and derives its revenues from sales at Company-operated restaurants and royalties, fees and advertising fund collections from franchised restaurants. Global Real Estate & Development includes real estate activity for owned sites and sites leased from third parties, which are leased and/or subleased to franchisees, and also includes our share of the income of our TimWen real estate joint venture. In addition, Global Real Estate & Development earns fees from facilitating franchisee-to-franchisee restaurant transfers (“Franchise Flips”) and providing other development-related services to franchisees. In this “Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations,” the Company reports on the segment profit for each of the three segments described above. The Company measures segment profit using segment adjusted earnings before interest, taxes, depreciation and amortization (“EBITDA”). Segment adjusted EBITDA excludes certain unallocated general and administrative expenses and other items that vary from period to period without correlation to the Company’s core operating performance. See “Results of Operations” below and Note 18 to the Condensed Consolidated Financial Statements contained in Item 1 herein for segment financial information.

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The Company’s fiscal reporting periods consist of 52 or 53 weeks ending on the Sunday closest to December 31. All three- and six-month periods presented herein contain 13 weeks and 26 weeks, respectively. All references to years, quarters and months relate to fiscal periods rather than calendar periods.

Executive Overview

Our Business

As of July 3, 2022, the Wendy’s restaurant system was comprised of 7,040 restaurants, with 5,983 Wendy’s restaurants in operation in the U.S. Of the U.S. restaurants, 403 were operated by the Company and 5,580 were operated by a total of 222 franchisees. In addition, at July 3, 2022, there were 1,057 Wendy’s restaurants in operation in 31 foreign countries and U.S. territories. Of the international restaurants, 1,049 were operated by franchisees and eight were operated by the Company in the United Kingdom (the “U.K.”).

The revenues from our restaurant business are derived from two principal sources: (1) sales at Company-operated restaurants and (2) franchise-related revenues, including royalties, national advertising funds contributions, rents and franchise fees received from Wendy’s franchised restaurants. Company-operated restaurants comprised approximately 5% of the total Wendy’s system as of July 3, 2022.

Wendy’s operating results are impacted by a number of external factors, including commodity costs, labor costs, intense price competition, unemployment and consumer spending levels, general economic and market trends and weather. The COVID-19 pandemic has had and may continue to have the effect of heightening the impact of many of these factors.

Wendy’s long-term growth opportunities include investing in accelerated global growth through (1) building our breakfast daypart, (2) accelerating our implementation of consumer-facing digital platforms and technologies and (3) expanding the Company’s footprint through global restaurant expansion.

Key Business Measures

We track our results of operations and manage our business using the following key business measures, which includes a non-GAAP financial measure:

•Same-Restaurant Sales - We report same-restaurant sales commencing after new restaurants have been open for 15 continuous months and as soon as reimaged restaurants reopen. Restaurants temporarily closed for more than one week are excluded from same-restaurant sales. The table summarizing same-restaurant sales below in “Results of Operations” provides the same-restaurant sales percent changes.

•Restaurant Margin - We define restaurant margin as sales from Company-operated restaurants less cost of sales divided by sales from Company-operated restaurants. Cost of sales includes food and paper, restaurant labor and occupancy, advertising and other operating costs. Restaurant margin is influenced by factors such as price increases, the effectiveness of our advertising and marketing initiatives, featured products, product mix, fluctuations in food and labor costs, restaurant openings, remodels and closures and the level of our fixed and semi-variable costs.

•Systemwide Sales - Systemwide sales is a non-GAAP financial measure, which includes sales by both Company-operated restaurants and franchised restaurants. Franchised restaurants’ sales are reported by our franchisees and represent their revenues from sales at franchised Wendy’s restaurants. The Company’s consolidated financial statements do not include sales by franchised restaurants to their customers. The Company’s royalty and advertising funds revenues are computed as percentages of sales made by Wendy’s franchisees. As a result, sales by Wendy’s franchisees have a direct effect on the Company’s royalty and advertising funds revenues and profitability.

The Company calculates same-restaurant sales and systemwide sales growth on a constant currency basis. Constant currency results exclude the impact of foreign currency translation and are derived by translating current year results at prior year average exchange rates. The Company believes excluding the impact of foreign currency translation provides better year over year comparability.

Same-restaurant sales and systemwide sales exclude sales from Argentina and Venezuela due to the highly inflationary economies of those countries. The Company considers economies that have had cumulative inflation in excess of 100% over a three-year period as highly inflationary.

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The Company believes its presentation of same-restaurant sales, restaurant margin and systemwide sales provide a meaningful perspective of the underlying operating performance of the Company’s current business and enables investors to better understand and evaluate the Company’s historical and prospective operating performance. The Company believes that these metrics are important supplemental measures of operating performance because they highlight trends in the Company’s business that may not otherwise be apparent when relying solely on GAAP financial measures. The Company believes investors, analysts and other interested parties use these metrics in evaluating issuers and that the presentation of these measures facilitates a comparative assessment of the Company’s operating performance. With respect to same-restaurant sales and systemwide sales, the Company also believes that the data is useful in assessing consumer demand for the Company’s products and the overall success of the Wendy’s brand.

The non-GAAP financial measure discussed above does not replace the presentation of the Company’s financial results in accordance with GAAP. Because all companies do not calculate non-GAAP financial measures in the same way, this measure as used by other companies may not be consistent with the way the Company calculates such measure.

Second Quarter Financial Highlights

•Revenue increased 9.0% to $537.8 million in the second quarter of 2022 compared to $493.3 million in the second quarter of 2021;

•Global same-restaurant sales increased 3.7%, U.S. same-restaurant sales increased 2.3% and international same-restaurant sales increased 15.2% compared to the second quarter of 2021;

•Company-operated restaurant margin was 14.5% in the second quarter of 2022, a decrease of 580 basis points compared to the second quarter of 2021; and

•Net income decreased 26.7% to $48.2 million in the second quarter of 2022 compared to $65.7 million in the second quarter of 2021.

Year-to-Date Financial Highlights

•Revenue increased 7.6% to $1.0 billion in the first six months of 2022 compared to $953.5 million in the first six months of 2021;

•Global same-restaurant sales increased 3.1%, U.S. same-restaurant sales increased 1.7% and international same-restaurant sales increased 14.7% compared to the first six months of 2021;

•Company-operated restaurant margin was 13.1% in the first six months of 2022, a decrease of 560 basis points from the first six months of 2021; and

•Net income decreased 20.1% to $85.6 million in the first six months of 2022 compared to $107.1 million in the first six months of 2021.

Breakfast

Wendy’s long-term growth opportunities include investing in accelerated global growth, which includes building upon our breakfast daypart. Since the launch of breakfast across the U.S. system in March 2020, systemwide sales have benefited from this new daypart, with average weekly U.S. breakfast sales representing approximately $2,600 per restaurant during the six months ended July 3, 2022. The Company launched breakfast in Canada on May 2, 2022, which has increased the percentage of global systemwide restaurants serving breakfast to approximately 95%. The Company expects to fund a total of $16.0 million of incremental advertising during 2022 to support the breakfast daypart, which the Company expects will continue to drive trial and acceleration of the Company’s breakfast offering in the U.S. and Canada.

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Digital

Wendy’s long-term growth opportunities include accelerated implementation of consumer-facing digital platforms and technologies. The Company has invested significant resources to focus on consumer-facing technology, including activating mobile ordering via Wendy’s mobile app, launching the Wendy’s Rewards loyalty program and establishing delivery agreements with third-party vendors. The Company’s digital business represented approximately 10.2% of global systemwide sales during the six months ended July 3, 2022. The Company is also partnering with key technology providers to help execute our digital, restaurant technology and enterprise technology initiatives and support our technology innovation and growth.

New Restaurant Development

Wendy’s long-term growth opportunities include expanding the Company’s footprint through global restaurant expansion. To promote new restaurant development, the Company has provided franchisees with certain incentive programs for qualifying new restaurants, including technical assistance fee waivers and reductions in royalty and national advertising payments. In addition, the Company has development agreements in place with a number of franchisees that contractually obligate such franchisees to open additional Wendy’s restaurants over a specified timeframe. During the six months ended July 3, 2022, the Company and its franchisees added 91 net new restaurants across the Wendy’s system.

During the second quarter of 2022, the Company reevaluated the development commitment by REEF Kitchens (“REEF”) and now anticipates that REEF will open 100 to 150 delivery kitchens by the end of 2025, primarily in Canada and the U.K. As a result, the Company now expects net new restaurant growth of 3% to 4% in 2022 and expects to reach 8,000 to 8,500 systemwide restaurants by the end of 2025.

Debt Financing

On April 1, 2022, the Company completed a debt financing transaction under which the Company issued fixed rate senior secured notes in the following 2022-1 series: Class A-2-I with an interest rate of 4.236% and initial principal amount of $100.0 million (the “Class A-2-I Notes”) and Class A-2-II with an interest rate of 4.535% and initial principal amount of $400.0 million (the “Class A-2-II Notes” and, collectively, the “Series 2022-1 Class A-2 Notes”). The anticipated repayment dates of the Class A-2-I Notes and the Class A-2-II Notes will be March 2029 and March 2032, respectively. See “Liquidity and Capital Resources” below and Note 7 to the Condensed Consolidated Financial Statements contained in Item 1 herein for further information on the Company’s debt financing transaction.

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Results of Operations

The tables included throughout this Results of Operations set forth in millions the Company’s condensed consolidated results of operations for the second quarter and the first six months of 2022 and 2021.

	Second Quarter						Six Months
	2022		2021		Change		2022		2021		Change
Revenues:
Sales	$	230.9	$	193.5	$	37.4	$	440.1	$	382.6	$	57.5
Franchise royalty revenue and fees	143.4		136.6		6.8		272.4		259.5		12.9
Franchise rental income	58.6		60.9		(2.3)		116.5		119.7		(3.2)
Advertising funds revenue	104.9		102.3		2.6		197.4		191.7		5.7
	537.8		493.3		44.5		1,026.4		953.5		72.9
Costs and expenses:
Cost of sales	197.3		154.2		43.1		382.3		311.0		71.3
Franchise support and other costs	9.9		8.9		1.0		21.7		16.6		5.1
Franchise rental expense	32.1		34.1		(2.0)		61.0		66.6		(5.6)
Advertising funds expense	111.0		107.9		3.1		208.8		202.1		6.7
General and administrative	61.6		63.1		(1.5)		124.0		115.7		8.3
Depreciation and amortization	33.4		30.8		2.6		66.7		62.3		4.4
System optimization gains, net	(0.2)		(30.8)		30.6		(3.7)		(31.3)		27.6
Reorganization and realignment costs	0.2		2.1		(1.9)		0.6		7.0		(6.4)
Impairment of long-lived assets	1.9		0.6		1.3		2.5		1.3		1.2
Other operating income, net	(5.7)		(4.3)		(1.4)		(8.7)		(7.7)		(1.0)
	441.5		366.6		74.9		855.2		743.6		111.6
Operating profit	96.3		126.7		(30.4)		171.2		209.9		(38.7)
Interest expense, net	(32.1)		(28.2)		(3.9)		(58.5)		(57.0)		(1.5)
Loss on early extinguishment of debt	—		(17.9)		17.9		—		(17.9)		17.9
Investment income, net	—		—		—		2.1		—		2.1
Other income, net	1.2		0.2		1.0		1.4		0.3		1.1
Income before income taxes	65.4		80.8		(15.4)		116.2		135.3		(19.1)
Provision for income taxes	(17.2)		(15.1)		(2.1)		(30.6)		(28.2)		(2.4)
Net income	$	48.2	$	65.7	$	(17.5)	$	85.6	$	107.1	$	(21.5)

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	Second Quarter								Six Months
	2022		% of Total Revenues		2021		% of Total Revenues		2022		% of Total Revenues		2021		% of Total Revenues
Revenues:
Sales	$	230.9	42.9	%	$	193.5	39.2	%	$	440.1	42.9	%	$	382.6	40.1	%
Franchise royalty revenue and fees:
Franchise royalty revenue	125.0		23.2	%	119.5		24.2	%	236.8		23.1	%	227.9		23.9	%
Franchise fees	18.4		3.5	%	17.1		3.5	%	35.6		3.4	%	31.6		3.3	%
Total franchise royalty revenue and fees	143.4		26.7	%	136.6		27.7	%	272.4		26.5	%	259.5		27.2	%
Franchise rental income	58.6		10.9	%	60.9		12.4	%	116.5		11.4	%	119.7		12.6	%
Advertising funds revenue	104.9		19.5	%	102.3		20.7	%	197.4		19.2	%	191.7		20.1	%
Total revenues	$	537.8	100.0	%	$	493.3	100.0	%	$	1,026.4	100.0	%	$	953.5	100.0	%
	Second Quarter								Six Months
	2022		% of  Sales		2021		% of  Sales		2022		% of  Sales		2021		% of  Sales
Cost of sales:
Food and paper	$	76.3	33.0	%	$	55.8	28.9	%	$	144.6	32.9	%	$	110.7	28.9	%
Restaurant labor	73.0		31.6	%	58.7		30.3	%	143.5		32.6	%	118.7		31.0	%
Occupancy, advertising and other operating costs	48.0		20.9	%	39.7		20.5	%	94.2		21.4	%	81.6		21.4	%
Total cost of sales	$	197.3	85.5	%	$	154.2	79.7	%	$	382.3	86.9	%	$	311.0	81.3	%

	Second Quarter								Six Months
	2022		% of Sales		2021		% of Sales		2022		% of Sales		2021		% of Sales
Restaurant margin	$	33.6	14.5	%	$	39.3	20.3	%	$	57.8	13.1	%	$	71.6	18.7	%

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The table below presents certain of the Company’s key business measures, which are defined and further discussed in the “Executive Overview” section included herein.

	Second Quarter						Six Months
	2022			2021			2022			2021
Key business measures:
U.S. same-restaurant sales:
Company-operated	2.9		%	23.9		%	2.9		%	18.3		%
Franchised	2.2		%	15.6		%	1.6		%	14.6		%
Systemwide	2.3		%	16.1		%	1.7		%	14.9		%
International same-restaurant sales (a)	15.2		%	31.4		%	14.7		%	19.0		%
Global same-restaurant sales:
Company-operated	2.9		%	23.9		%	2.9		%	18.3		%
Franchised (a)	3.7		%	17.0		%	3.1		%	15.0		%
Systemwide (a)	3.7		%	17.4		%	3.1		%	15.2		%
Systemwide sales (b):
U.S. Company-operated	$	227.9		$	193.3		$	434.4		$	382.4
U.S. franchised	2,772.6			2,704.1			5,278.2			5,162.4
U.S. systemwide	3,000.5			2,897.4			5,712.6			5,544.8
International Company-operated	3.0			0.2			5.7			0.2
International franchised (a)	416.3			353.4			773.0			657.0
International systemwide (a)	419.3			353.6			778.7			657.2
Global systemwide (a)	$	3,419.8		$	3,251.0		$	6,491.3		$	6,202.0

_______________

(a)Excludes Argentina and Venezuela due to the impact of the highly inflationary economies of those countries.

(b)During the second quarter of 2022 and 2021, global systemwide sales increased 5.6% and 22.9%, respectively, U.S. systemwide sales increased 3.5% and 20.6%, respectively, and international systemwide sales increased 22.7% and 48.2%, respectively, on a constant currency basis. During the first six months of 2022 and 2021, global systemwide sales increased 4.9% and 17.7%, respectively, U.S. systemwide sales increased 3.0% and 16.9%, respectively, and international systemwide sales increased 21.1% and 25.6%, respectively, on a constant currency basis.

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	Second Quarter
	U.S. Company-operated	U.S. Franchised	International Company-operated	International Franchised	Systemwide
Restaurant count:
Restaurant count at April 3, 2022	402	5,567	6	1,041	7,016
Opened	3	26	2	16	47
Closed (a)	(2)	(13)	—	(8)	(23)
Restaurant count at July 3, 2022	403	5,580	8	1,049	7,040
	Six Months
	U.S. Company-operated	U.S. Franchised	International Company-operated	International Franchised	Systemwide
Restaurant count at January 2, 2022	403	5,535	5	1,006	6,949
Opened	3	71	3	63	140
Closed (a)	(4)	(25)	—	(20)	(49)
Net purchased from (sold by) franchisees	1	(1)	—	—	—
Restaurant count at July 3, 2022	403	5,580	8	1,049	7,040

_______________

(a)Excludes restaurants temporarily closed.

Sales	Second Quarter						Six Months
	2022		2021		Change		2022		2021		Change
Sales	$	230.9	$	193.5	$	37.4	$	440.1	$	382.6	$	57.5

The increase in sales for the second quarter and the first six months of 2022 was primarily due to (1) the Company’s acquisition of 93 franchise-operated restaurants in Florida during the fourth quarter of 2021, (2) a 2.9% increase in Company-operated same-restaurant sales and (3) net new restaurant development. These increases were partially offset by the sale of 47 Company-operated restaurants in New York during the second quarter of 2021. Company-operated same-restaurant sales increased due to higher average check, partially offset by a decrease in customer count. Company-operated same-restaurant sales during the first six months of 2021 benefited from government stimulus payments to consumers during the first quarter of 2021, which did not recur in the first six months of 2022.

Franchise Royalty Revenue and Fees	Second Quarter						Six Months
	2022		2021		Change		2022		2021		Change
Franchise royalty revenue	$	125.0	$	119.5	$	5.5	$	236.8	$	227.9	$	8.9
Franchise fees	18.4		17.1		1.3		35.6		31.6		4.0
	$	143.4	$	136.6	$	6.8	$	272.4	$	259.5	$	12.9

The increase in franchise royalty revenue during the second quarter and the first six months of 2022 was primarily due to (1) a 3.7% and 3.1% increase in global franchise same-restaurant sales, respectively, and (2) a net increase in the number of franchise restaurants in operation during 2022 compared to 2021. Franchise same-restaurant sales increased due to higher average check, partially offset by a decrease in customer count. Franchise same-restaurant sales during the first six months of 2021 benefited from government stimulus payments to consumers during the first quarter of 2021, which did not recur in the first six months of 2022.

The increase in franchise fees during the second quarter and the first six months of 2022 was primarily due to higher fees for providing information technology services to franchisees. The increase in franchise fees during the first six months of 2022 reflects the one-month waiver of technology fees during the first quarter of 2021, partially offset by the accelerated recognition of franchise fees associated with canceled development agreements during the first six months of 2021.

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Franchise Rental Income	Second Quarter						Six Months
	2022		2021		Change		2022		2021		Change
Franchise rental income	$	58.6	$	60.9	$	(2.3)	$	116.5	$	119.7	$	(3.2)

The decrease in franchise rental income during the second quarter and the first six months of 2022 was primarily due to the impact of terminating existing leases where the Company was lessor in connection with the Company’s acquisition of franchise-operated restaurants in Florida during the fourth quarter of 2021. This decrease was partially offset by the impact of the sale of Company-operated restaurants in New York during the second quarter of 2021.

Advertising Funds Revenue	Second Quarter						Six Months
	2022		2021		Change		2022		2021		Change
Advertising funds revenue	$	104.9	$	102.3	$	2.6	$	197.4	$	191.7	$	5.7

The increase in advertising funds revenue during the second quarter and the first six months of 2022 was primarily due to an increase in franchise same-restaurant sales in the U.S. and Canada.

Cost of Sales, as a Percent of Sales	Second Quarter						Six Months
	2022		2021		Change		2022		2021		Change
Food and paper	33.0	%	28.9	%	4.1	%	32.9	%	28.9	%	4.0	%
Restaurant labor	31.6	%	30.3	%	1.3	%	32.6	%	31.0	%	1.6	%
Occupancy, advertising and other operating costs	20.9	%	20.5	%	0.4	%	21.4	%	21.4	%	—	%
	85.5	%	79.7	%	5.8	%	86.9	%	81.3	%	5.6	%

The increase in cost of sales, as a percent of sales, during the second quarter and the first six months of 2022 was primarily due to (1) higher commodity costs, (2) an increase in restaurant labor rates, (3) a decrease in customer count and (4) the impact of the Company’s investments to support the entry into the U.K. market. These impacts were partially offset by higher average check.

Franchise Support and Other Costs	Second Quarter						Six Months
	2022		2021		Change		2022		2021		Change
Franchise support and other costs	$	9.9	$	8.9	$	1.0	$	21.7	$	16.6	$	5.1

The increase in franchise support and other costs during the second quarter and the first six months of 2022 was primarily due to an increase in costs incurred to provide information technology and other services to franchisees.

Franchise Rental Expense	Second Quarter						Six Months
	2022		2021		Change		2022		2021		Change
Franchise rental expense	$	32.1	$	34.1	$	(2.0)	$	61.0	$	66.6	$	(5.6)

The decrease in franchise rental expense during the second quarter and the first six months of 2022 was primarily due to (1) the impact of assigning certain leases to franchisees and (2) the impact of the Company’s acquisition of franchise-operated restaurants in Florida during the fourth quarter of 2021.

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Advertising Funds Expense	Second Quarter						Six Months
	2022		2021		Change		2022		2021		Change
Advertising funds expense	$	111.0	$	107.9	$	3.1	$	208.8	$	202.1	$	6.7

On an interim basis, advertising funds expense is recognized in proportion to advertising funds revenue. The Company expects advertising funds expense to exceed advertising funds revenue by approximately $21.0 million for 2022, which includes (1) the Company’s previously announced decision to fund up to $16.0 million of incremental advertising and (2) the amount by which advertising funds revenue exceeded advertising funds expense in prior years (excluding the Company’s funding of incremental advertising) of approximately $5.0 million. During the second quarter and the first six months of 2022, advertising funds expense increased due to an increase in franchise same-restaurant sales in the U.S. and Canada.

General and Administrative	Second Quarter						Six Months
	2022		2021		Change		2022		2021		Change
Incentive compensation	$	6.7	$	15.1	$	(8.4)	$	12.9	$	22.5	$	(9.6)
Employee compensation and benefits	30.6		28.3		2.3		63.6		57.0		6.6
Professional fees	14.4		11.4		3.0		27.2		21.9		5.3
Travel-related expenses	3.0		1.5		1.5		5.2		2.0		3.2
Other, net	6.9		6.8		0.1		15.1		12.3		2.8
	$	61.6	$	63.1	$	(1.5)	$	124.0	$	115.7	$	8.3

The decrease in general and administrative expenses during the second quarter of 2022 was primarily due to a decrease in incentive compensation accruals, reflecting higher operating performance as compared to plan in the first six months of 2021 compared to the first six months of 2022. This decrease was partially offset by (1) an increase in employee compensation and related benefits, reflecting investments in resources to support the Company’s development and digital organizations, (2) higher professional fees, primarily as a result of costs associated with the Company’s enterprise resource planning (“ERP”) implementation and (3) an increase in travel-related expenses.

The increase in general and administrative expenses during the first six months of 2022 was primarily due to (1) an increase in employee compensation and related benefits, reflecting investments in resources to support the Company’s development and digital organizations, (2) higher professional fees, primarily as a result of costs associated with the Company’s ERP implementation and (3) an increase in travel-related expenses. These increases were partially offset by a decrease in incentive compensation accruals, reflecting higher operating performance as compared to plan in the first six months of 2021 compared to the first six months of 2022.

Depreciation and Amortization	Second Quarter						Six Months
	2022		2021		Change		2022		2021		Change
Restaurants	$	21.3	$	18.7	$	2.6	$	43.1	$	38.1	$	5.0
Technology support, corporate and other	12.1		12.1		—		23.6		24.2		(0.6)
	$	33.4	$	30.8	$	2.6	$	66.7	$	62.3	$	4.4

The increase in depreciation and amortization during the second quarter and the first six months of 2022 was primarily due to depreciation and amortization on assets acquired from a franchisee in Florida during the fourth quarter of 2021.

System Optimization Gains, Net	Second Quarter						Six Months
	2022		2021		Change		2022		2021		Change
System optimization gains, net	$	(0.2)	$	(30.8)	$	30.6	$	(3.7)	$	(31.3)	$	27.6

System optimization gains, net for the first six months of 2022 were primarily comprised of post-closing adjustments on previous sales of restaurants. System optimization gains, net for the second quarter and the first six months of 2021 were primarily comprised of a gain on the sale of 47 Company-operated restaurants in New York. See Note 4 to the Condensed Consolidated Financial Statements contained in Item 1 herein for further information.

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Reorganization and Realignment Costs	Second Quarter						Six Months
	2022		2021		Change		2022		2021		Change
System optimization initiative	$	0.2	$	0.9	$	(0.7)	$	0.5	$	5.5	$	(5.0)
Other reorganization and realignment plans	—		1.2		(1.2)		0.1		1.5		(1.4)
	$	0.2	$	2.1	$	(1.9)	$	0.6	$	7.0	$	(6.4)

As part of the Company’s system optimization initiative, the Company expects to continue to optimize the Wendy’s system through strategic restaurant acquisitions and dispositions, as well as by facilitating Franchise Flips. During the six months ended July 3, 2022, the Company recognized costs associated with its system optimization initiative totaling $0.5 million, which were primarily comprised of professional fees and other costs associated with the Company’s acquisition of 93 franchise-operated restaurants in Florida during the fourth quarter of 2021. During the six months ended July 4, 2021, the Company recognized costs totaling $5.5 million, which were primarily comprised of the write-off of certain lease assets and lease termination fees associated with the bankruptcy sale process of NPC Quality Burgers, Inc. (“NPC”). The Company expects to recognize a gain of approximately $0.7 million, primarily related to the write-off of certain NPC-related lease liabilities upon final termination of the leases. See Note 5 to the Condensed Consolidated Financial Statements contained in Item 1 herein for further information regarding the NPC bankruptcy sale process.

Costs incurred under the Company’s other reorganization and realignment plans were not material during the three and six months ended months ended July 3, 2022 and July 4, 2021. The Company does not expect to incur any material additional costs under these plans.

Impairment of Long-Lived Assets	Second Quarter						Six Months
	2022		2021		Change		2022		2021		Change
Impairment of long-lived assets	$	1.9	$	0.6	$	1.3	$	2.5	$	1.3	$	1.2

The change in impairment charges during the second quarter and the first six months of 2022 was primarily driven by higher impairment charges as a result of the deterioration in operating performance of certain Company-operated restaurants.

Other Operating Income, Net	Second Quarter						Six Months
	2022		2021		Change		2022		2021		Change
Gains on sales-type leases	$	(1.7)	$	(1.6)	$	(0.1)	$	(2.2)	$	(3.5)	$	1.3
Lease buyout	(1.3)		(0.8)		(0.5)		(2.1)		(0.9)		(1.2)
Equity in earnings in joint ventures, net	(2.5)		(1.7)		(0.8)		(4.3)		(3.3)		(1.0)
Other, net	(0.2)		(0.2)		—		(0.1)		—		(0.1)
	$	(5.7)	$	(4.3)	$	(1.4)	$	(8.7)	$	(7.7)	$	(1.0)

The increase in other operating income, net during the second quarter and the first six months of 2022 was primarily due to (1) lease buyout activity and (2) an increase in the equity in earnings from our TimWen joint venture. During the first six months of 2022, these increases were partially offset by lower gains on new and modified sales-type leases.

Interest Expense, Net	Second Quarter						Six Months
	2022		2021		Change		2022		2021		Change
Interest expense, net	$	32.1	$	28.2	$	3.9	$	58.5	$	57.0	$	1.5

The increase in interest expense, net during the second quarter and the first six months of 2022 was primarily due to the impact of completing a debt financing transaction under the Company’s securitized financing facility in the first quarter of 2022. This increase was partially offset by the impact of completing the refinancing of a portion of the Company’s securitized financing facility in the second quarter of 2021.

36

Loss on Early Extinguishment of Debt	Second Quarter						Six Months
	2022		2021		Change		2022		2021		Change
Loss on early extinguishment of debt	$	—	$	17.9	$	(17.9)	$	—	$	17.9	$	(17.9)

During the second quarter of 2021, in connection with the refinancing of a portion of the Company’s securitized financing facility, the Company incurred a loss on the early extinguishment of debt as a result of repaying the outstanding Series 2015-1 Class A-2-III Notes and Series 2018-1 Class A-2-I Notes with the proceeds from the issuance of its Series 2021-1 Class A-2 Notes. The loss on the early extinguishment of debt of $17.9 million was comprised of a specified make-whole payment of $9.6 million and the write-off of certain unamortized deferred financing costs of $8.3 million.

Investment Income, Net	Second Quarter						Six Months
	2022		2021		Change		2022		2021		Change
Investment income, net	$	—	$	—	$	—	$	2.1	$	—	$	2.1

During the first six months of 2022, the Company recognized a gain of $2.1 million on an investment in equity securities as a result of an observable price change.

Other Income, Net	Second Quarter						Six Months
	2022		2021		Change		2022		2021		Change
Other income, net	$	1.2	$	0.2	$	1.0	$	1.4	$	0.3	$	1.1

The change in other income, net during the second quarter and the first six months of 2022 was primarily due to interest income earned on our cash equivalents, which increased as a result of cash received from our debt financing transaction under the Company’s securitized financing facility in the first quarter of 2022.

Provision for Income Taxes	Second Quarter									Six Months
	2022			2021			Change			2022			2021			Change
Income before income taxes	$	65.4		$	80.8		$	(15.4)		$	116.2		$	135.3		$	(19.1)
Provision for income taxes	(17.2)			(15.1)			(2.1)			(30.6)			(28.2)			(2.4)
Effective tax rate on income	26.4		%	18.6		%	7.8		%	26.4		%	20.8		%	5.6		%

Our effective tax rates for the second quarter and the first six months of 2022 and 2021 were impacted by variations in income before income taxes, adjusted for recurring items such as non-deductible expenses and state income taxes, as well as non-recurring discrete items. The increase in the effective tax rate for the second quarter and the first six months of 2022 was primarily due to a decrease in the benefit from share-based compensation.

Segment Information

See Note 18 to the Condensed Consolidated Financial Statements contained in Item 1 herein for further information regarding the Company’s segments.

Wendy’s U.S.

	Second Quarter						Six Months
	2022		2021		Change		2022		2021		Change
Sales	$	227.9	$	193.3	$	34.6	$	434.4	$	382.4	$	52.0
Franchise royalty revenue	108.9		106.0		2.9		206.8		202.8		4.0
Franchise fees	16.0		14.3		1.7		31.4		26.2		5.2
Advertising fund revenue	97.6		96.2		1.4		185.2		180.4		4.8
Total revenues	$	450.4	$	409.8	$	40.6	$	857.8	$	791.8	$	66.0
Segment profit	$	127.0	$	126.7	$	0.3	$	231.8	$	238.7	$	(6.9)

37

The increase in Wendy’s U.S. revenues during the second quarter and the first six months of 2022 was primarily due to (1) the Company’s acquisition of 93 franchise-operated restaurants in Florida during the fourth quarter of 2021 and (2) an increase in same-restaurant sales. The increase in Wendy’s U.S. revenues during the first six months of 2022 was also driven by higher fees for providing information technology services to franchisees, reflecting the one-month waiver of technology fees during the first quarter of 2021. Same-restaurant sales increased during the second quarter and the first six months of 2022 primarily due to higher average check, partially offset by a decrease in customer count. These increases were partially offset by the sale of 47 Company-operated restaurants in New York during the second quarter of 2021.

The decrease in Wendy’s U.S. segment profit during the first six months of 2022 was primarily due to higher cost of sales, as a percent of sales for Company-operated restaurants driven by the same factors as described above for “Cost of Sales, as a Percent of Sales” (excluding the impact of the U.K. market). These impacts were partially offset by higher revenues.

Wendy’s International

	Second Quarter						Six Months
	2022		2021		Change		2022		2021		Change
Sales	$	3.0	$	0.2	$	2.8	$	5.7	$	0.2	$	5.5
Franchise royalty revenue	16.1		13.6		2.5		30.0		25.1		4.9
Franchise fees	1.2		1.4		(0.2)		2.4		3.0		(0.6)
Advertising fund revenue	7.2		6.1		1.1		12.3		11.3		1.0
Total revenues	$	27.5	$	21.3	$	6.2	$	50.4	$	39.6	$	10.8
Segment profit	$	9.4	$	6.5	$	2.9	$	14.8	$	14.2	$	0.6

The increase in Wendy’s International revenues during the second quarter and the first six months of 2022 was primarily due to (1) the opening of Company-operated restaurants in the U.K. beginning in the second quarter of 2021 and (2) an increase in same-restaurant sales. Same-restaurant sales increased during the second quarter and first six months of 2022 due to (1) an increase in customer count and (2) higher average check.

The increase in Wendy’s International segment profit during the second quarter and the first six months of 2022 was primarily due to higher revenues. This increase was partially offset by (1) the Company’s investments to support the entry into the U.K. market and (2) higher advertising fund expense, reflecting the Company’s funding of incremental advertising to support the launch of breakfast in Canada on May 2, 2022.

Global Real Estate & Development

	Second Quarter						Six Months
	2022		2021		Change		2022		2021		Change
Franchise fees	$	1.3	$	1.3	$	—	$	1.8	$	2.5	$	(0.7)
Franchise rental income	58.6		60.9		(2.3)		116.5		119.7		(3.2)
Total revenues	$	59.9	$	62.2	$	(2.3)	$	118.3	$	122.2	$	(3.9)
Segment profit	$	27.3	$	26.6	$	0.7	$	54.9	$	52.8	$	2.1

The decrease in Global Real Estate & Development revenues during the second quarter and the first six months of 2022 was primarily due to lower franchise rental income. See “Franchise Rental Income” above for further information.

The increase in Global Real Estate & Development segment profit during the second quarter and the first six months of 2022 was primarily due to a decrease in franchise rental expense. See “Franchise Rental Expense” above for further information. This change was partially offset by lower revenues.

38

Liquidity and Capital Resources

Cash Flows

Our primary sources of liquidity and capital resources are cash flows from operations and borrowings under our securitized financing facility. Our principal uses of cash are operating expenses, capital expenditures, repurchases of common stock and dividends to stockholders.

Our anticipated cash requirements for the remainder of 2022, exclusive of operating cash flow requirements, consist principally of:

•capital expenditures of approximately $60.0 million to $70.0 million, resulting in total anticipated cash capital expenditures for the year of approximately $90.0 million to $100.0 million;

•cash dividends aggregating approximately $53.2 million as discussed below in “Dividends;” and

•potential stock repurchases of up to $198.1 million, as discussed below in “Stock Repurchases.”

Based on current levels of operations, the Company expects that available cash and cash flows from operations will provide sufficient liquidity to meet operating cash requirements for the next 12 months.

We currently believe we have the ability to pursue additional sources of liquidity if needed or desired to fund operating cash requirements or for other purposes. However, there can be no assurance that additional liquidity will be readily available or available on terms acceptable to us.

The table below summarizes our cash flows from operating, investing and financing activities for the first six months of 2022 and 2021:

	Six Months
	2022		2021		Change
Net cash provided by (used in):
Operating activities	$	98.2	$	158.8	$	(60.6)
Investing activities	(28.8)		32.0		(60.8)
Financing activities	362.7		28.9		333.8
Effect of exchange rate changes on cash	(2.4)		2.2		(4.6)
Net increase in cash, cash equivalents and restricted cash	$	429.7	$	221.9	$	207.8

Operating Activities

Cash provided by operating activities consists primarily of net income, adjusted for non-cash expenses such as depreciation and amortization, deferred income tax and share-based compensation, and the net change in operating assets and liabilities. Cash provided by operating activities was $98.2 million and $158.8 million in the first six months of 2022 and 2021, respectively. The change was primarily due to (1) an increase in payments for incentive compensation for the 2021 fiscal year paid in 2022, (2) the timing of receipt of franchisee rental payments and (3) cash paid for cloud computing arrangements, primarily related to the Company’s ERP implementation. These changes were partially offset by the timing of payments for marketing expenses of the national advertising funds.

Investing Activities

Cash (used in) provided by investing activities was $(28.8) million and $32.0 million in the first six months of 2022 and 2021, respectively. The change was primarily due to (1) a decrease in proceeds from dispositions of $49.5 million, reflecting the sale of 47 Company-operated restaurants in New York during the second quarter of 2021, (2) an increase in capital expenditures of $6.9 million and (3) the net settlement of deposits associated with the Company’s consortium bid to acquire NPC’s Wendy’s restaurants of $4.9 million in the first quarter of 2021.

39

Financing Activities

Cash provided by financing activities was $362.7 million and $28.9 million in the first six months of 2022 and 2021, respectively. The change was primarily due to (1) a net increase in cash provided by long-term debt activities of $339.7 million, reflecting the respective impacts of the completion of the Company’s debt financing transaction during the first quarter of 2022 and the debt refinancing transaction during the second quarter of 2021, and (2) a decrease in the repurchases of common stock of $31.7 million. These changes were partially offset by an (1) a decrease in proceeds from stock option exercises, net of payments related to tax withholding for share-based compensation, of $22.7 million and (2) an increase in dividends of $11.3 million.

Long-Term Debt, Including Current Portion

Wendy’s Funding, LLC, a limited-purpose, bankruptcy-remote, wholly-owned indirect subsidiary of The Wendy’s Company, is the master issuer (the “Master Issuer”) of outstanding senior secured notes under a securitized financing facility that was entered into in June 2015. On April 1, 2022, the Master Issuer completed a financing transaction with respect to this facility under which the Master Issuer issued the Series 2022-1 Class A-2 Notes with initial principal amounts totaling $500.0 million. The net proceeds from the sale of the Series 2022-1 Class A-2 Notes will be used for general corporate purposes, which may include funding for growth initiatives, return of capital to shareholders and debt retirement.

Under the securitized financing facility, the Master Issuer has issued outstanding Series 2021-1 Variable Funding Senior Secured Notes, Class A-1 (the “Class A-1 Notes”), which allow for the drawing of up to $300.0 million on a revolving basis using various credit instruments, including a letter of credit facility. No amounts were borrowed under the Class A-1 Notes during the six months ended July 3, 2022.

Except as described above, there were no material changes to the terms of any debt obligations since January 2, 2022. The Company was in compliance with its debt covenants as of July 3, 2022. See Note 7 to the Condensed Consolidated Financial Statements contained in Item 1 herein for further information related to our long-term debt obligations.

Dividends

On March 15, 2022 and June 15, 2022, the Company paid quarterly cash dividends per share of $.125, aggregating $53.5 million. On August 10, 2022, the Company announced a dividend of $.125 per share to be paid on September 15, 2022 to stockholders of record as of September 1, 2022. If the Company pays regular quarterly cash dividends for the remainder of 2022 at the same rate as declared in the third quarter of 2022, the Company’s total cash requirement for dividends for the remainder of 2022 will be approximately $53.2 million based on the number of shares of its common stock outstanding at August 3, 2022. The Company currently intends to continue to declare and pay quarterly cash dividends; however, there can be no assurance that any additional quarterly dividends will be declared or paid or of the amount or timing of such dividends, if any.

Stock Repurchases

In February 2022, our Board of Directors authorized a repurchase program for up to $100.0 million of our common stock through February 28, 2023, when and if market conditions warrant and to the extent legally permissible (the “February 2022 Authorization”). On April 1, 2022, the Company’s Board of Directors approved an increase of $150.0 million to the February 2022 Authorization, resulting in an aggregate authorization of $250.0 million that continues to expire on February 28, 2023. During the six months ended July 3, 2022, the Company repurchased 2.8 million shares under the February 2022 Authorization with an aggregate purchase price of $51.9 million, excluding commissions. As of July 3, 2022, the Company had $198.1 million of availability remaining under the February 2022 authorization. Subsequent to July 3, 2022 through August 9, 2022, no shares were repurchased under the February 2022 Authorization.

In February 2020, our Board of Directors authorized a repurchase program for up to $100.0 million of our common stock through February 28, 2021, when and if market conditions warranted and to the extent legally permissible (the “February 2020 Authorization”). In July 2020, the Company’s Board of Directors approved an extension of the February 2020 Authorization by one year, through February 28, 2022. In addition, in May 2021, August 2021 and November 2021, the Board of Directors approved increases of $50.0 million, $70.0 million and $80.0 million, respectively, to the February 2020 Authorization, resulting in an aggregate authorization of $300.0 million that continued to expire on February 28, 2022. In November 2021, the Company entered into an accelerated share repurchase agreement (the “2021 ASR Agreement”) with a third-party financial institution to repurchase common stock as part of the February 2020 Authorization. Under the 2021 ASR Agreement, the

40

Company paid the financial institution an initial purchase price of $125.0 million in cash and received an initial delivery of 4.9 million shares of common stock, representing an estimated 85% of the total shares expected to be delivered under the 2021 ASR Agreement. In February 2022, the Company completed the 2021 ASR Agreement and received an additional 0.7 million shares of common stock. The total number of shares of common stock ultimately purchased by the Company under the 2021 ASR Agreement was based on the average of the daily volume-weighted average prices of the common stock during the term of the 2021 ASR Agreement, less an agreed upon discount. In total, 5.6 million shares were delivered under the 2021 ASR Agreement at an average purchase price of $22.22 per share. With the completion of the 2021 ASR Agreement in February 2022 as described above, the Company completed the February 2020 Authorization.

Cloud Computing Arrangements

In addition to the anticipated cash requirements for capital expenditures noted above, the Company expects to spend approximately $30.0 million during 2022 on cloud computing arrangements (“CCA”), primarily related to the Company’s ERP implementation. The Company’s cash expenditures related to CCA amounted to $13.2 million during the six months ended July 3, 2022.

General Inflation, Commodities and Changing Prices

Inflationary pressures on labor and commodity price increases directly impacted our consolidated results of operations during the six months ended July 3, 2022, and we expect this to continue throughout the remainder of 2022. We attempt to manage any inflationary costs and commodity price increases through selective menu price increases and changes in product mix. Delays in implementing such menu price increases, competitive pressures, consumer spending levels and other factors may limit our ability to recover such cost increases in the future. Inherent volatility experienced in certain commodity markets, such as those for beef, chicken, pork, cheese and grains, could have a significant effect on our results of operations and may have an adverse effect on us in the future. The extent of any impact will depend on our ability to manage such volatility through product mix and selective menu price increases.

Seasonality

Wendy’s restaurant operations are moderately seasonal. Wendy’s average restaurant sales are normally higher during the summer months than during the winter months. Because our business is moderately seasonal, results for a particular quarter are not necessarily indicative of the results that may be achieved for any other quarter or for the full fiscal year.

Item 3. Quantitative and Qualitative Disclosures about Market Risk.

This “Quantitative and Qualitative Disclosures about Market Risk” should be read in conjunction with “Item 7A. Quantitative and Qualitative Disclosures about Market Risk” in our annual report on Form 10-K for the fiscal year ended January 2, 2022 (the “Form 10-K”).

As of July 3, 2022, there were no material changes from the information contained in the Form 10-K, except as described below.

Interest Rate Risk

Following the Company’s debt financing transaction that was completed on April 1, 2022, our long-term debt, including the current portion, aggregated $2,910.4 million as of July 3, 2022 (excluding unamortized debt issuance costs and the effect of purchase accounting adjustments). The Company’s predominantly fixed-rate debt structure reduces its exposure to interest rate increases that could adversely affect its earnings and cash flows. The Company is exposed to interest rate increases under its Series 2021-1 Class A-1 Notes and other lines of credit; however, the Company had no outstanding borrowings under the 2021-1 Class A-1 Notes and other lines of credit as of July 3, 2022. See “Liquidity and Capital Resources” in “Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations” and Note 7 to the Condensed Consolidated Financial Statements contained in Item 1 herein for further information regarding the Company’s debt financing transaction.

41

Item 4. Controls and Procedures.

Evaluation of Disclosure Controls and Procedures

The management of the Company, under the supervision and with the participation of the Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of the design and operation of its disclosure controls and procedures (as defined in Rules 13a-15(e) or 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) as of July 3, 2022. Based on such evaluations, the Chief Executive Officer and Chief Financial Officer concluded that as of July 3, 2022, the disclosure controls and procedures of the Company were effective at a reasonable assurance level in (1) recording, processing, summarizing and reporting, on a timely basis, information required to be disclosed by the Company in the reports that it files or submits under the Exchange Act and (2) ensuring that information required to be disclosed by the Company in such reports is accumulated and communicated to management, including the Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.

Changes in Internal Control Over Financial Reporting

There were no changes in the internal control over financial reporting of the Company during the second quarter of 2022 that materially affected, or are reasonably likely to materially affect, its internal control over financial reporting.

Inherent Limitations on Effectiveness of Controls

There are inherent limitations in the effectiveness of any control system, including the potential for human error and the possible circumvention or overriding of controls and procedures. Additionally, judgments in decision-making can be faulty and breakdowns can occur because of a simple error or mistake. An effective control system can provide only reasonable, not absolute, assurance that the control objectives of the system are adequately met. Accordingly, the management of the Company, including its Chief Executive Officer and Chief Financial Officer, does not expect that the control system can prevent or detect all error or fraud. Finally, projections of any evaluation or assessment of effectiveness of a control system to future periods are subject to the risks that, over time, controls may become inadequate because of changes in an entity’s operating environment or deterioration in the degree of compliance with policies or procedures.

42

PART II. OTHER INFORMATION

Special Note Regarding Forward-Looking Statements and Projections

This Quarterly Report on Form 10-Q and oral statements made from time to time by representatives of the Company may contain or incorporate by reference certain statements that are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995 (the “Reform Act”). Generally, forward-looking statements include the words “may,” “believes,” “plans,” “expects,” “anticipates,” “intends,” “estimate,” “goal,” “upcoming,” “outlook,” “guidance” or the negation thereof, or similar expressions. In addition, all statements that address future operating, financial or business performance, strategies or initiatives, future efficiencies or savings, anticipated costs or charges, future capitalization, anticipated impacts of recent or pending investments or transactions and statements expressing general views about future results or brand health are forward-looking statements within the meaning of the Reform Act. Forward-looking statements are based on our expectations at the time such statements are made, speak only as of the dates they are made and are susceptible to a number of risks, uncertainties and other factors. For all of our forward-looking statements, we claim the protection of the safe harbor for forward-looking statements contained in the Reform Act. Our actual results, performance and achievements may differ materially from any future results, performance or achievements expressed or implied by our forward-looking statements. Many important factors could affect our future results and cause those results to differ materially from those expressed in or implied by our forward-looking statements. Such factors include, but are not limited to, the following:

•the disruption to our business from the novel coronavirus (COVID-19) pandemic and the impact of the pandemic on our results of operations, financial condition and prospects;

•the impact of competition or poor customer experiences at Wendy’s restaurants;

•adverse economic conditions or disruptions, including in regions with a high concentration of Wendy’s restaurants;

•changes in discretionary consumer spending and consumer tastes and preferences;

•impacts to our corporate reputation or the value and perception of our brand;

•the effectiveness of our marketing and advertising programs and new product development;

•our ability to manage the accelerated impact of social media;

•our ability to protect our intellectual property;

•food safety events or health concerns involving our products;

•our ability to achieve our growth strategy through new restaurant development and our Image Activation program;

•our ability to effectively manage the acquisition and disposition of restaurants or successfully implement other

strategic initiatives;

•risks associated with leasing and owning significant amounts of real estate, including environmental matters;

•our ability to achieve and maintain market share in the breakfast daypart;

•risks associated with our international operations, including our ability to execute our international growth strategy;

•changes in commodity and other operating costs;

•shortages or interruptions in the supply or distribution of our products and other risks associated with our independent

supply chain purchasing co-op;

•the impact of increased labor costs or labor shortages;

•the continued succession and retention of key personnel and the effectiveness of our leadership structure;

43

•risks associated with our digital commerce strategy, platforms and technologies, including our ability to adapt to changes in industry trends and consumer preferences;

•our dependence on computer systems and information technology, including risks associated with the failure, misuse, interruption or breach of our systems or technology or other cyber incidents or deficiencies;

•risks associated with our securitized financing facility and other debt agreements, including compliance with operational and financial covenants, restrictions on our ability to raise additional capital, the impact of our overall debt levels and our ability to generate sufficient cash flow to meet our debt service obligations and operate our business;

•risks associated with our capital allocation policy, including the amount and timing of equity and debt repurchases and

dividend payments;

•risks associated with complaints and litigation, compliance with legal and regulatory requirements and an increased focus on environmental, social and governance issues;

•risks associated with the availability and cost of insurance, changes in accounting standards, the recognition of impairment or other charges, the impact of reorganization and realignment initiatives, changes in tax rates or tax laws and fluctuations in foreign currency exchange rates;

•conditions beyond our control, such as adverse weather conditions, natural disasters, hostilities, social unrest, health epidemics or pandemics or other catastrophic events;

•Trian Fund Management, L.P. and certain of its affiliates filed a Schedule 13D/A with the Securities and Exchange Commission on May 24, 2022 indicating, among other things, that they intend to explore and evaluate the possibility of participating, alone or with third parties, in a potential transaction with respect to us to enhance stockholder value; there can be no assurance that (i) any such potential transaction will occur or result in additional value for our stockholders or (ii) that the exploration of a potential transaction will not have an adverse impact on our business; and

•other risks and uncertainties affecting us and our subsidiaries referred to in our Annual Report on Form 10-K filed with the SEC on March 1, 2022 (see especially “Item 1A. Risk Factors” and “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations”) and in our other current and periodic filings with the SEC.

In addition to the factors described above, there are risks associated with our predominantly franchised business model that could impact our results, performance and achievements. Such risks include our ability to identify, attract and retain experienced and qualified franchisees, our ability to effectively manage the transfer of restaurants between and among franchisees, the business and financial health of franchisees, the ability of franchisees to meet their royalty, advertising, development, reimaging and other commitments, participation by franchisees in brand strategies and the fact that franchisees are independent third parties that own, operate and are responsible for overseeing the operations of their restaurants. Our predominantly franchised business model may also impact the ability of the Wendy’s system to effectively respond and adapt to market changes. Many of these risks have been or in the future may be heightened due to the business disruption and impact from the COVID-19 pandemic.

All future written and oral forward-looking statements attributable to us or any person acting on our behalf are expressly qualified in their entirety by the cautionary statements contained or referred to above. New risks and uncertainties arise from time to time, and factors that we currently deem immaterial may become material, and it is impossible for us to predict these events or how they may affect us. We assume no obligation to update any forward-looking statements after the date of this Quarterly Report on Form 10-Q as a result of new information, future events or developments, except as required by federal securities laws, although we may do so from time to time. We do not endorse any projections regarding future performance that may be made by third parties.

44

Item 1. Legal Proceedings.

The Company is involved in litigation and claims incidental to our business. We provide accruals for such litigation and claims when payment is probable and reasonably estimable. The Company believes it has adequate accruals for all of its legal and environmental matters. We cannot estimate the aggregate possible range of loss for our existing litigation and claims for various reasons, including, but not limited to, many proceedings being in preliminary stages, with various motions either yet to be submitted or pending, discovery yet to occur and/or significant factual matters unresolved. In addition, most cases seek an indeterminate amount of damages and many involve multiple parties. Predicting the outcomes of settlement discussions or judicial or arbitral decisions is thus inherently difficult and future developments could cause these actions or claims, individually or in aggregate, to have a material adverse effect on the Company’s financial condition, results of operations, or cash flows of a particular reporting period.

Item 1A. Risk Factors.

In addition to the information contained in this report, you should carefully consider the risk factors disclosed in our Form 10-K, which could materially affect our business, financial condition or future results. Except as described elsewhere in this report, there have been no material changes from the risk factors previously disclosed in our Form 10-K.

Item 2.  Unregistered Sales of Equity Securities and Use of Proceeds.

The following table provides information with respect to repurchases of shares of our common stock by us and our “affiliated purchasers” (as defined in Rule 10b-18(a)(3) under the Exchange Act) during the second quarter of 2022:

Issuer Repurchases of Equity Securities

Period	Total Number of Shares Purchased (1)	Average Price Paid per Share	Total Number of Shares Purchased as Part of Publicly Announced Plans	Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans (2)
April 4, 2022 through May 8, 2022	1,295,675	$20.19	1,295,675	$223,863,512
May 9, 2022 through June 5, 2022	1,292,374	$17.48	1,284,060	$201,440,686
June 6, 2022 through July 3, 2022	214,621	$18.62	178,775	$198,088,626
Total	2,802,670	$18.82	2,758,510	$198,088,626

(1)Includes 44,160 shares of common stock reacquired by the Company from holders of share-based awards to satisfy certain requirements associated with the vesting or exercise of the respective award. The shares were valued at the fair market value of the Company’s common stock on the vesting or exercise date of such awards, as set forth in the applicable plan document.

(2)In February 2022, our Board of Directors authorized the repurchase of up to $100.0 million of our common stock through February 28, 2023, when and if market conditions warrant and to the extent legally permissible (the “February 2022 Authorization”). On April 1, 2022, our Board of Directors approved an increase of $150.0 million to the February 2022 Authorization, resulting in an aggregate authorization of $250.0 million that continues to expire on February 28, 2023.

Subsequent to July 3, 2022 through August 9, 2022, no shares were repurchased under the February 2022 Authorization.

45

Item 6. Exhibits.

EXHIBIT NO.	DESCRIPTION
31.1	Certification of the Chief Executive Officer of The Wendy’s Company, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.*
31.2	Certification of the Chief Financial Officer of The Wendy’s Company, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.*
32.1	Certifications of the Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.*
101	The following financial information from The Wendy’s Company’s Quarterly Report on Form 10-Q for the quarter ended July 3, 2022 formatted in Inline eXtensible Business Reporting Language: (i) the Condensed Consolidated Balance Sheets, (ii) the Condensed Consolidated Statements of Operations, (iii) the Condensed Consolidated Statements of Comprehensive Income, (iv) the Condensed Consolidated Statements of Stockholders’ Equity, (v) the Condensed Consolidated Statements of Cash Flows, and (vi) Notes to Condensed Consolidated Financial Statements.
104	The cover page from The Wendy’s Company’s Quarterly Report on Form 10-Q for the quarter ended July 3, 2022, formatted in Inline XBRL and contained in Exhibit 101.

_______________

*	Filed herewith.
**	Identifies a management contract or compensatory plan or arrangement.

46

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	THE WENDY’S COMPANY (Registrant)
Date: August 10, 2022	By: /s/ Gunther Plosch
	Gunther Plosch
	Chief Financial Officer
	(On behalf of the registrant)
Date: August 10, 2022	By: /s/ Leigh A. Burnside
	Leigh A. Burnside
	Senior Vice President, Chief Accounting Officer and
	Chief Financial Officer U.S.
	(Principal Accounting Officer)

47

EX-31.1

EXHIBIT 31.1

CERTIFICATION OF THE CHIEF EXECUTIVE OFFICER

OF THE WENDY’S COMPANY, PURSUANT TO SECTION 302

OF THE SARBANES-OXLEY ACT OF 2002

I, Todd A. Penegor, certify that:

1.I have reviewed this quarterly report on Form 10-Q of The Wendy’s Company;

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c)Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d)Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: August 10, 2022

/s/ Todd A. Penegor          

Todd A. Penegor

President and Chief Executive Officer

EX-31.2

EXHIBIT 31.2

CERTIFICATION OF THE CHIEF FINANCIAL OFFICER

OF THE WENDY’S COMPANY, PURSUANT TO SECTION 302

OF THE SARBANES-OXLEY ACT OF 2002

I, Gunther Plosch, certify that:

1.I have reviewed this quarterly report on Form 10-Q of The Wendy’s Company;

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c)Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d)Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: August 10, 2022

/s/ Gunther Plosch          

Gunther Plosch

Chief Financial Officer

EX-32.1

EXHIBIT 32.1

CERTIFICATIONS OF THE CHIEF EXECUTIVE OFFICER AND CHIEF FINANCIAL OFFICER

PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

Pursuant to Section 1350 of Chapter 63 of Title 18 of the United States Code, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, each of the undersigned officers of The Wendy’s Company, a Delaware corporation (the “Company”), does hereby certify, to the best of such officer’s knowledge, that in connection with the Quarterly Report on Form 10-Q of the Company for the quarter ended July 3, 2022 (the “Form 10-Q”):

1.the Form 10-Q fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2.the information contained in the Form 10-Q fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: August 10, 2022

/s/ Todd A. Penegor             

Todd A. Penegor

President and Chief Executive Officer

Date: August 10, 2022

/s/ Gunther Plosch               

Gunther Plosch

Chief Financial Officer

XML

Document and Entity Information - shares	6 Months Ended
	Jul. 03, 2022	Aug. 03, 2022
Document and Entity Information [Abstract]
Document Type	10-Q
Document Quarterly Report	true
Document Period End Date	Jul. 03, 2022
Document Transition Report	false
Entity File Number	1-2207
Entity Registrant Name	THE WENDY’S COMPANY
Entity Incorporation, State or Country Code	DE
Entity Tax Identification Number	38-0471180
Entity Address, Address Line One	One Dave Thomas Blvd.
Entity Address, City or Town	Dublin
Entity Address, State or Province	OH
Entity Address, Postal Zip Code	43017
City Area Code	614
Local Phone Number	764-3100
Title of 12(b) Security	Common Stock, $.10 par value
Trading Symbol	WEN
Security Exchange Name	NASDAQ
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Large Accelerated Filer
Entity Small Business	false
Entity Emerging Growth Company	false
Entity Shell Company	false
Entity Central Index Key	0000030697
Current Fiscal Year End Date	--01-01
Document Fiscal Year Focus	2022
Document Fiscal Period Focus	Q2
Amendment Flag	false
Entity Common Stock, Shares Outstanding		212,803,949

XML

Condensed Consolidated Balance Sheets - USD ($) shares in Thousands, $ in Thousands	Jul. 03, 2022	Jan. 02, 2022
Current assets:
Cash and cash equivalents	$ 700,813	$ 249,438
Restricted cash	33,997	27,535
Accounts and notes receivable, net	115,367	119,540
Inventories	6,456	5,934
Prepaid expenses and other current assets	35,548	30,584
Advertising funds restricted assets	151,741	159,818
Total current assets	1,043,922	592,849
Properties	890,423	906,867
Finance lease assets	238,878	244,279
Operating lease assets	783,645	812,620
Goodwill	774,703	775,278
Other intangible assets	1,262,762	1,280,791
Investments	50,195	49,870
Net investment in sales-type and direct financing leases	312,376	299,707
Other assets	158,677	139,130
Total assets	5,515,581	5,101,391
Current liabilities:
Current portion of long-term debt	29,250	24,250
Current portion of finance lease liabilities	17,034	15,513
Current portion of operating lease liabilities	47,482	47,315
Accounts payable	36,156	41,163
Accrued expenses and other current liabilities	112,144	140,783
Advertising funds restricted liabilities	156,757	157,901
Total current liabilities	398,823	426,925
Long-term debt	2,832,790	2,356,416
Long-term finance lease liabilities	567,082	559,587
Long-term operating lease liabilities	823,991	853,328
Deferred income taxes	274,511	267,710
Deferred franchise fees	89,246	88,102
Other liabilities	106,275	112,918
Total liabilities	5,092,718	4,664,986
Commitments and contingencies
Stockholders’ equity:
Common stock, $0.10 par value; 1,500,000 shares authorized; 470,424 shares issued; 212,781 and 215,849 shares outstanding, respectively	47,042	47,042
Additional paid-in capital	2,926,739	2,898,633
Retained earnings	376,187	344,198
Common stock held in treasury, at cost; 257,643 and 254,575 shares, respectively	(2,872,568)	(2,805,268)
Accumulated other comprehensive loss	(54,537)	(48,200)
Total stockholders’ equity	422,863	436,405
Total liabilities and stockholders’ equity	$ 5,515,581	$ 5,101,391
Common Stock, Par Value	$ 0.10	$ 0.10
Common Stock, Shares Authorized	1,500,000	1,500,000
Common Stock, Shares Issued	470,424	470,424
Common Stock, Shares, Outstanding	212,781	215,849
Treasury Stock, Shares	257,643	254,575

XML

Condensed Consolidated Statements of Operations - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jul. 03, 2022	Jul. 04, 2021	Jul. 03, 2022	Jul. 04, 2021
Revenues
Franchise rental income	$ 58,610	$ 60,868	$ 116,481	$ 119,744
Revenues	537,783	493,337	1,026,426	953,540
Costs and expenses
Cost of sales	197,285	154,154	382,338	311,004
Franchise support and other costs	9,912	8,885	21,728	16,571
Franchise rental expense	32,076	34,068	61,012	66,634
Advertising funds expense	110,973	107,875	208,773	202,113
General and administrative	61,637	63,114	123,983	115,736
Depreciation and amortization	33,428	30,761	66,659	62,303
System optimization gains, net	(152)	(30,766)	(3,686)	(31,282)
Reorganization and realignment costs	156	2,102	620	7,036
Impairment of long-lived assets	1,860	630	2,476	1,265
Other operating income, net	(5,673)	(4,232)	(8,639)	(7,708)
Costs and expenses	441,502	366,591	855,264	743,672
Operating profit	96,281	126,746	171,162	209,868
Interest expense, net	(32,125)	(28,204)	(58,490)	(56,990)
Loss on early extinguishment of debt	0	(17,917)	0	(17,917)
Investment (loss) income, net	(4)	3	2,107	6
Other income, net	1,238	158	1,445	284
Income before income taxes	65,390	80,786	116,224	135,251
Provision for income taxes	(17,239)	(15,062)	(30,671)	(28,161)
Net income	$ 48,151	$ 65,724	$ 85,553	$ 107,090
Earnings per share
Earnings Per Share, Basic	$ 0.23	$ 0.30	$ 0.40	$ 0.48
Earnings Per Share, Diluted	$ 0.22	$ 0.29	$ 0.39	$ 0.47
Sales
Revenues
Revenue from Contract with Customer, Excluding Assessed Tax	$ 230,869	$ 193,525	$ 440,144	$ 382,582
Franchise royalty revenue and fees
Revenues
Revenue from Contract with Customer, Excluding Assessed Tax	143,436	136,661	272,412	259,491
Advertising funds revenue
Revenues
Revenue from Contract with Customer, Excluding Assessed Tax	$ 104,868	$ 102,283	$ 197,389	$ 191,723

XML

Condensed Consolidated Statements of Comprehensive Income - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jul. 03, 2022	Jul. 04, 2021	Jul. 03, 2022	Jul. 04, 2021
Net income	$ 48,151	$ 65,724	$ 85,553	$ 107,090
Other comprehensive (loss) income:
Foreign currency translation adjustment	(7,455)	3,347	(6,337)	5,567
Other comprehensive (loss) income	(7,455)	3,347	(6,337)	5,567
Comprehensive income	$ 40,696	$ 69,071	$ 79,216	$ 112,657

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Condensed Consolidated Statements of Stockholders' Equity - USD ($) $ in Thousands	Total	Common Stock	Additional Paid-In Capital	Retained Earnings	Common Stock Held in Treasury	Accumulated Other Comprehensive Loss
Stockholders' Equity, beginning of period at Jan. 03, 2021	$ 549,596	$ 47,042	$ 2,899,276	$ 238,674	$ (2,585,755)	$ (49,641)
Increase (Decrease) in Stockholders' Equity
Net income	41,366	0	0	41,366	0	0
Other comprehensive income (loss)	2,220	0	0	0	0	2,220
Cash dividends	(20,156)	0	0	(20,156)	0	0
Repurchases of common stock	(56,084)	0	0	0	(56,084)	0
Share-based compensation	5,151	0	5,151	0	0	0
Common stock issued upon exercises of stock options	663	0	(20)	0	683	0
Common stock issued upon vesting of restricted shares	(2,179)	0	(2,996)	0	817	0
Other	88	0	49	(5)	44	0
Stockholders' Equity, end of period at Apr. 04, 2021	520,665	47,042	2,901,460	259,879	(2,640,295)	(47,421)
Stockholders' Equity, beginning of period at Jan. 03, 2021	549,596	47,042	2,899,276	238,674	(2,585,755)	(49,641)
Increase (Decrease) in Stockholders' Equity
Net income	107,090
Other comprehensive income (loss)	5,567
Stockholders' Equity, end of period at Jul. 04, 2021	570,356	47,042	2,907,274	303,475	(2,643,361)	(44,074)
Stockholders' Equity, beginning of period at Apr. 04, 2021	520,665	47,042	2,901,460	259,879	(2,640,295)	(47,421)
Increase (Decrease) in Stockholders' Equity
Net income	65,724	0	0	65,724	0	0
Other comprehensive income (loss)	3,347	0	0	0	0	3,347
Cash dividends	(22,123)	0	0	(22,123)	0	0
Repurchases of common stock	(27,291)	0	0	0	(27,291)	0
Share-based compensation	5,882	0	5,882	0	0	0
Common stock issued upon exercises of stock options	24,316	0	850	0	23,466	0
Common stock issued upon vesting of restricted shares	(245)	0	(959)	0	714	0
Other	81	0	41	(5)	45	0
Stockholders' Equity, end of period at Jul. 04, 2021	570,356	47,042	2,907,274	303,475	(2,643,361)	(44,074)
Stockholders' Equity, beginning of period at Jan. 02, 2022	436,405	47,042	2,898,633	344,198	(2,805,268)	(48,200)
Increase (Decrease) in Stockholders' Equity
Net income	37,402	0	0	37,402	0	0
Other comprehensive income (loss)	1,118	0	0	0	0	1,118
Cash dividends	(26,911)	0	0	(26,911)	0	0
Repurchases of common stock	0	0	18,750	0	(18,750)	0
Share-based compensation	6,348	0	6,348	0	0	0
Common stock issued upon exercises of stock options	1,591	0	237	0	1,354	0
Common stock issued upon vesting of restricted shares	(1,530)	0	(1,989)	0	459	0
Other	112	0	63	(8)	57	0
Stockholders' Equity, end of period at Apr. 03, 2022	454,535	47,042	2,922,042	354,681	(2,822,148)	(47,082)
Stockholders' Equity, beginning of period at Jan. 02, 2022	436,405	47,042	2,898,633	344,198	(2,805,268)	(48,200)
Increase (Decrease) in Stockholders' Equity
Net income	85,553
Other comprehensive income (loss)	(6,337)
Stockholders' Equity, end of period at Jul. 03, 2022	422,863	47,042	2,926,739	376,187	(2,872,568)	(54,537)
Stockholders' Equity, beginning of period at Apr. 03, 2022	454,535	47,042	2,922,042	354,681	(2,822,148)	(47,082)
Increase (Decrease) in Stockholders' Equity
Net income	48,151	0	0	48,151	0	0
Other comprehensive income (loss)	(7,455)	0	0	0	0	(7,455)
Cash dividends	(26,635)	0	0	(26,635)	0	0
Repurchases of common stock	(51,950)	0	0	0	(51,950)	0
Share-based compensation	6,122	0	6,122	0	0	0
Common stock issued upon exercises of stock options	99	0	(300)	0	399	0
Common stock issued upon vesting of restricted shares	(105)	0	(1,178)	0	1,073	0
Other	101	0	53	(10)	58	0
Stockholders' Equity, end of period at Jul. 03, 2022	$ 422,863	$ 47,042	$ 2,926,739	$ 376,187	$ (2,872,568)	$ (54,537)

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Condensed Consolidated Statements of Cash Flows - USD ($) $ in Thousands	6 Months Ended
	Jul. 03, 2022	Jul. 04, 2021
Cash flows from operating activities:
Net income	$ 85,553	$ 107,090
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	66,659	62,303
Share-based compensation	12,470	11,033
Impairment of long-lived assets	2,476	1,265
Deferred income tax	7,306	(2,137)
Non-cash rental expense, net	16,684	20,075
Change in operating lease liabilities	(22,913)	(23,074)
Net receipt of deferred vendor incentives	5,039	3,332
System optimization gains, net	(3,686)	(31,282)
Distributions received from joint ventures, net of equity in earnings	1,108	2,354
Long-term debt-related activities, net	3,731	21,328
Cloud computing arrangements expenditures	(13,213)	(2,412)
Changes in operating assets and liabilities and other, net	(63,019)	(11,124)
Net cash provided by operating activities	98,195	158,751
Cash flows from investing activities:
Capital expenditures	(30,941)	(24,069)
Franchise development fund	(1,312)	0
Acquisitions	0	4,879
Dispositions	1,016	50,531
Notes receivable, net	2,445	611
Net cash (used in) provided by investing activities	(28,792)	31,952
Cash flows from financing activities:
Proceeds from long-term debt	500,000	1,100,000
Repayments of long-term debt	(12,125)	(941,220)
Repayments of finance lease liabilities	(9,495)	(5,777)
Deferred financing costs	(10,232)	(20,873)
Repurchases of common stock	(51,950)	(83,658)
Dividends	(53,546)	(42,279)
Proceeds from stock option exercises	1,959	25,933
Payments related to tax withholding for share-based compensation	(1,904)	(3,197)
Net cash provided by financing activities	362,707	28,929
Net cash provided by operations before effect of exchange rate changes on cash	432,110	219,632
Effect of exchange rate changes on cash	(2,428)	2,283
Net increase in cash, cash equivalents and restricted cash	429,682	221,915
Cash, cash equivalents and restricted cash at beginning of period	366,966	418,241
Cash, cash equivalents and restricted cash at end of period	$ 796,648	$ 640,156

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Basis of Presentation

6 Months Ended

Jul. 03, 2022

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Basis of Presentation

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements (the “Financial Statements”) of The Wendy’s Company (“The Wendy’s Company” and, together with its subsidiaries, the “Company,” “we,” “us” or “our”) have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information and, therefore, do not include all information and footnotes required by GAAP for complete financial statements. In our opinion, the Financial Statements contain all adjustments of a normal recurring nature necessary to present fairly our financial position as of July 3, 2022, the results of our operations for the three and six months ended July 3, 2022 and July 4, 2021 and cash flows for the six months ended July 3, 2022 and July 4, 2021. The results of operations for the six months ended July 3, 2022 are not necessarily indicative of the results to be expected for the full 2022 fiscal year. The Financial Statements should be read in conjunction with the audited consolidated financial statements for The Wendy’s Company and notes thereto included in our Annual Report on Form 10-K for the fiscal year ended January 2, 2022 (the “Form 10-K”).

In March 2020, the World Health Organization declared the novel strain of coronavirus (“COVID-19”) a global pandemic. We continue to monitor the dynamic nature of the COVID-19 pandemic on our business, results and financial condition; however, we cannot predict the ultimate duration, scope or severity of the COVID-19 pandemic or its ultimate impact on our results of operations, financial condition and prospects.

The principal 100% owned subsidiary of the Company is Wendy’s International, LLC and its subsidiaries (“Wendy’s”). The Company manages and internally reports its business in the following segments: (1) Wendy’s U.S., (2) Wendy’s International and (3) Global Real Estate & Development. See Note 18 for further information.

We report on a fiscal year consisting of 52 or 53 weeks ending on the Sunday closest to or on December 31. All three- and six-month periods presented herein contain 13 weeks and 26 weeks, respectively. All references to years, quarters and months relate to fiscal periods rather than calendar periods.

Our significant interim accounting policies include the recognition of advertising funds expense in proportion to advertising funds revenue.

Reclassifications

The Company has reclassified payments for cloud computing arrangements to “Cloud computing arrangements expenditures,” which were previously recorded to “Changes in operating assets and liabilities and other, net.” The prior period amounts in the condensed consolidated statement of cash flows reflect the reclassification of these cash flows to conform to the current year presentation. There was no impact to “Net cash provided by operating activities.”

The following table illustrates the reclassifications made to the condensed consolidated statement of cash flows for the six months ended July 4, 2021:

	As Previously Reported		Reclassifications		As Currently Reported
Cloud computing arrangements expenditures	$	—	$	(2,412)	$	(2,412)
Changes in operating assets and liabilities and other, net	(13,536)		2,412		(11,124)

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Revenue

6 Months Ended

Jul. 03, 2022

Revenue [Abstract]

Revenue from Contract with Customer

Revenue

Disaggregation of Revenue

The following tables disaggregate revenue by segment and source:

	Wendy’s U.S.		Wendy’s International		Global Real Estate & Development		Total
Three Months Ended July 3, 2022
Sales at Company-operated restaurants	$	227,903	$	2,966	$	—	$	230,869
Franchise royalty revenue	108,872		16,141		—		125,013
Franchise fees	15,986		1,167		1,270		18,423
Franchise rental income	—		—		58,610		58,610
Advertising funds revenue	97,679		7,189		—		104,868
Total revenues	$	450,440	$	27,463	$	59,880	$	537,783
Six Months Ended July 3, 2022
Sales at Company-operated restaurants	$	434,404	$	5,740	$	—	$	440,144
Franchise royalty revenue	206,792		29,966		—		236,758
Franchise fees	31,391		2,438		1,825		35,654
Franchise rental income	—		—		116,481		116,481
Advertising funds revenue	185,164		12,225		—		197,389
Total revenues	$	857,751	$	50,369	$	118,306	$	1,026,426
Three Months Ended July 4, 2021
Sales at Company-operated restaurants	$	193,279	$	246	$	—	$	193,525
Franchise royalty revenue	106,006		13,560		—		119,566
Franchise fees	14,331		1,454		1,310		17,095
Franchise rental income	—		—		60,868		60,868
Advertising funds revenue	96,227		6,056		—		102,283
Total revenues	$	409,843	$	21,316	$	62,178	$	493,337
Six Months Ended July 4, 2021
Sales at Company-operated restaurants	$	382,336	$	246	$	—	$	382,582
Franchise royalty revenue	202,770		25,130		—		227,900
Franchise fees	26,261		2,897		2,433		31,591
Franchise rental income	—		—		119,744		119,744
Advertising funds revenue	180,430		11,293		—		191,723
Total revenues	$	791,797	$	39,566	$	122,177	$	953,540

Contract Balances

The following table provides information about receivables and contract liabilities (deferred franchise fees) from contracts with customers:

	July 3, 2022 (a)		January 2, 2022 (a)
Receivables, which are included in “Accounts and notes receivable, net” (b)	$	57,838	$	49,168
Receivables, which are included in “Advertising funds restricted assets”	66,918		65,497
Deferred franchise fees (c)	99,108		97,186

_______________

(a)Excludes funds collected from the sale of gift cards, which are primarily reimbursed to franchisees upon redemption at franchised restaurants and do not ultimately result in the recognition of revenue in the Company’s condensed consolidated statements of operations.

(b)Includes receivables related to “Sales” and “Franchise royalty revenue and fees.”

(c)Deferred franchise fees are included in “Accrued expenses and other current liabilities” and “Deferred franchise fees” and totaled $9,862 and $89,246, respectively, as of July 3, 2022, and $9,084 and $88,102, respectively, as of January 2, 2022.

Significant changes in deferred franchise fees are as follows:

	Six Months Ended
	July 3, 2022		July 4, 2021
Deferred franchise fees at beginning of period	$	97,186	$	97,785
Revenue recognized during the period	(5,037)		(6,845)
New deferrals due to cash received and other	6,959		7,469
Deferred franchise fees at end of period	$	99,108	$	98,409

Anticipated Future Recognition of Deferred Franchise Fees

The following table reflects the estimated franchise fees to be recognized in the future related to performance obligations that are unsatisfied at the end of the period:

Estimate for fiscal year:
2022 (a)	$	6,831
2023	6,440
2024	6,260
2025	6,084
2026	5,975
Thereafter	67,518
	$	99,108

_______________

(a)Represents franchise fees expected to be recognized for the remainder of 2022, which includes development-related franchise fees expected to be recognized over a duration of one year or less.

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Acquisitions

6 Months Ended

Jul. 03, 2022

Business Combinations [Abstract]

Acquisitions

Acquisitions

The Company completed no significant acquisitions of restaurants from franchisees during the six months ended July 3, 2022 and July 4, 2021.

During 2021, the Company acquired 93 restaurants from a franchisee for total net cash consideration of $127,948. The fair values of the identifiable net assets related to the acquisition were provisional amounts as of January 2, 2022, pending final purchase accounting adjustments. The Company finalized the purchase price allocation during the three months ended April 3, 2022, which resulted in no adjustments to the fair values of the identifiable net assets related to the acquisition.

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System Optimization Gains, Net

6 Months Ended

Jul. 03, 2022

System Optimization

Property, Plant and Equipment

System Optimization Gains, Net

System Optimization Gains, Net

The Company’s system optimization initiative includes a shift from Company-operated restaurants to franchised restaurants over time, through acquisitions and dispositions, as well as facilitating franchisee-to-franchisee restaurant transfers (“Franchise Flips”). As of January 1, 2017, the Company completed its plan to reduce its ongoing Company-operated restaurant ownership to approximately 5% of the total system. While the Company has no plans to move its ownership away from approximately 5% of the total system, the Company expects to continue to optimize the Wendy’s system through Franchise Flips, as well as evaluating strategic acquisitions of franchised restaurants and strategic dispositions of Company-operated restaurants to existing and new franchisees, to further strengthen the franchisee base, drive new restaurant development and accelerate reimages. During the six months ended July 3, 2022 and July 4, 2021, the Company facilitated 46 and 19 Franchise Flips, respectively. In addition, during the three months ended July 4, 2021, the Company completed the sale of 47 Company-operated restaurants in New York (including Manhattan) to franchisees. No Company-operated restaurants were sold to franchisees during the six months ended July 3, 2022.

Gains and losses recognized on dispositions are recorded to “System optimization gains, net” in our condensed consolidated statements of operations. Costs related to acquisitions and dispositions under our system optimization initiative are recorded to “Reorganization and realignment costs,” which are further described in Note 5. All other costs incurred related to facilitating Franchise Flips are recorded to “Franchise support and other costs.”

The following is a summary of the disposition activity recorded as a result of our system optimization initiative:

	Three Months Ended				Six Months Ended
	July 3, 2022		July 4, 2021		July 3, 2022		July 4, 2021
Number of restaurants sold to franchisees	—		47		—		47
Proceeds from sales of restaurants (a)	$	—	$	50,518	$	—	$	50,518
Net assets sold (b)	—		(16,939)		—		(16,939)
Goodwill related to sales of restaurants	—		(4,847)		—		(4,847)
Net unfavorable leases (c)	—		(2,939)		—		(2,939)
Gain on sales-type leases	—		7,156		—		7,156
Other (d)	—		(2,148)		—		(2,148)
	—		30,801		—		30,801
Post-closing adjustments on sales of restaurants (e)	75		—		3,522		515
Gain on sales of restaurants, net	75		30,801		3,522		31,316
Gain (loss) on sales of other assets, net (f)	77		(35)		164		(34)
System optimization gains, net	$	152	$	30,766	$	3,686	$	31,282

_______________

(a)In addition to the proceeds noted herein, the Company received cash proceeds of $63 and $158 during the three and six months ended July 3, 2022, respectively, related to a note receivable issued in connection with the sale of the Manhattan Company-operated restaurants.

(b)Net assets sold consisted primarily of equipment.

(c)During the three and six months ended July 4, 2021, the Company recorded favorable lease assets of $3,799 and unfavorable lease liabilities of $6,738 as a result of leasing and/or subleasing land, buildings and/or leasehold improvements to franchisees, in connection with the sale of the New York Company-operated restaurants (including Manhattan).

(d)The three and six months ended July 4, 2021 include a deferred gain of $3,500 as a result of certain contingencies related to the extension of lease terms.

(e)Represents the recognition of deferred gains as a result of the resolution of certain contingencies related to the extension of lease terms for restaurants previously sold to franchisees.

(f)During the three and six months ended July 3, 2022, the Company received net cash proceeds of $690 and $858, respectively, primarily from the sale of surplus and other properties. During the three and six months ended July 4, 2021, the Company received net cash proceeds of $10 and $13, respectively, primarily from the sale of surplus and other properties.

Assets Held for Sale

As of July 3, 2022 and January 2, 2022, the Company had assets held for sale of $3,754 and $3,541, respectively, primarily consisting of surplus properties. Assets held for sale are included in “Prepaid expenses and other current assets.”

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Reorganization and Realignment Costs

6 Months Ended

Jul. 03, 2022

Restructuring and Related Activities [Abstract]

Reorganization and Realignment Costs

Reorganization and Realignment Costs

The following is a summary of the initiatives included in “Reorganization and realignment costs:”

	Three Months Ended				Six Months Ended
	July 3, 2022		July 4, 2021		July 3, 2022		July 4, 2021
System optimization initiative	$	134	$	897	$	541	$	5,575
Other reorganization and realignment plans	22		1,205		79		1,461
Reorganization and realignment costs	$	156	$	2,102	$	620	$	7,036

System Optimization Initiative

The Company recognizes costs related to acquisitions and dispositions under its system optimization initiative. During the six months ended July 3, 2022, the Company recognized costs totaling $541, which were primarily comprised of professional fees and other costs associated with the Company’s acquisition of 93 franchise-operated restaurants in Florida during the fourth quarter of 2021. During the six months ended July 4, 2021, the Company recognized costs totaling $5,575, which were primarily comprised of the write-off of certain lease assets and lease termination fees associated with the bankruptcy sale process of NPC Quality Burgers, Inc. (“NPC”). As previously announced, NPC, formerly the Company’s largest franchisee, filed for chapter 11 bankruptcy in July 2020 and completed a process during the three months ended April 4, 2021 under which all of NPC’s Wendy’s restaurants were sold to Wendy’s approved franchisees. The Company expects to recognize a gain of approximately $700, primarily related to the write-off of certain NPC-related lease liabilities, upon final termination of the leases.

The following is a summary of the costs recorded as a result of our system optimization initiative:

	Three Months Ended				Six Months Ended				Total Incurred Since Inception
	July 3, 2022		July 4, 2021		July 3, 2022		July 4, 2021
Severance and related employee costs	$	—	$	661	$	—	$	661	$	18,898
Professional fees	80		504		374		739		24,051
Other (a)	37		—		133		1,354		7,751
	117		1,165		507		2,754		50,700
Accelerated depreciation and amortization (b)	—		—		—		—		25,398
NPC lease termination costs (c)	17		(268)		34		2,821		2,890
Share-based compensation (d)	—		—		—		—		5,013
Total system optimization initiative	$	134	$	897	$	541	$	5,575	$	84,001

_______________

(a)The six months ended July 4, 2021 includes transaction fees of $1,350 associated with the NPC bankruptcy sale process.

(b)Primarily includes accelerated amortization of previously acquired franchise rights related to the Company-operated restaurants in territories that have been sold to franchisees in connection with our system optimization initiative.

(c)The six months ended July 4, 2021 includes the write-off of lease assets of $1,341 and lease termination fees paid of $1,480.

(d)Represents incremental share-based compensation resulting from the modification of stock options and performance-based awards in connection with the termination of employees under our system optimization initiative.

The tables below present a rollforward of our accruals for our system optimization initiative, which were included in “Accrued expenses and other current liabilities” as of January 3, 2021.

	Balance January 2, 2022		Charges		Payments		Balance July 3, 2022
Professional fees	$	—	$	374	$	(374)	$	—
Other	—		133		(133)		—
	$	—	$	507	$	(507)	$	—

	Balance January 3, 2021		Charges		Payments		Balance July 4, 2021
Severance and related employee costs	$	—	$	661	$	(661)	$	—
Professional fees	1,230		739		(1,969)		—
Other	—		1,354		(1,354)		—
	$	1,230	$	2,754	$	(3,984)	$	—

Other Reorganization and Realignment Plans

Costs incurred under the Company’s other reorganization and realignment plans were not material during the six months ended July 3, 2022 and July 4, 2021. The Company does not expect to incur any material additional costs under these plans.

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Investments

6 Months Ended

Jul. 03, 2022

Investments [Abstract]

Investments

Investments

The following is a summary of the carrying value of our investments:

	July 3, 2022		January 2, 2022
Equity method investments	$	38,088	$	39,870
Other investments in equity securities	12,107		10,000
	$	50,195	$	49,870

Equity Method Investments

Wendy’s has a 50% share in a partnership in a Canadian restaurant real estate joint venture (“TimWen”) with a subsidiary of Restaurant Brands International Inc., a quick-service restaurant company that owns the Tim Hortons® brand (Tim Hortons is a registered trademark of Tim Hortons USA Inc.). In addition, the Company has a 20% share in a joint venture in Brazil (the “Brazil JV”). The Company has significant influence over these investees. Such investments are accounted for using the equity method, under which our results of operations include our share of the income (loss) of the investees in “Other operating income, net.”

Presented below is activity related to our investment in TimWen and the Brazil JV included in our condensed consolidated financial statements:

	Six Months Ended
	July 3, 2022		July 4, 2021
Balance at beginning of period	$	39,870	$	44,574
Equity in earnings for the period	5,736		4,921
Amortization of purchase price adjustments (a)	(1,455)		(1,658)
	4,281		3,263
Distributions received	(5,389)		(5,617)
Foreign currency translation adjustment included in “Other comprehensive (loss) income” and other	(674)		1,456
Balance at end of period	$	38,088	$	43,676

_______________

(a)Purchase price adjustments that impacted the carrying value of the Company’s investment in TimWen are being amortized over the average original aggregate life of 21 years.

Other Investments in Equity Securities

During 2021, the Company made an investment in equity securities of $10,000. During the six months ended July 3, 2022, the Company recognized a gain of $2,107 as a result of an observable price change for a similar investment of the same issuer.

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Long-Term Debt

6 Months Ended

Jul. 03, 2022

Debt Disclosure [Abstract]

Long-Term Debt

Long-Term Debt

Long-term debt consisted of the following:

	July 3, 2022		January 2, 2022
Series 2022-1 Class A-2 Notes:
4.236% Series 2022-1 Class A-2-I Notes, anticipated repayment date 2029	$	100,000	$	—
4.535% Series 2022-1 Class A-2-II Notes, anticipated repayment date 2032	400,000		—
Series 2021-1 Class A-2 Notes:
2.370% Series 2021-1 Class A-2-I Notes, anticipated repayment date 2029	445,500		447,750
2.775% Series 2021-1 Class A-2-II Notes, anticipated repayment date 2031	643,500		646,750
Series 2019-1 Class A-2 Notes:
3.783% Series 2019-1 Class A-2-I Notes, anticipated repayment date 2026	366,000		368,000
4.080% Series 2019-1 Class A-2-II Notes, anticipated repayment date 2029	411,750		414,000
Series 2018-1 Class A-2 Notes:
3.884% Series 2018-1 Class A-2-II Notes, anticipated repayment date 2028	453,625		456,000
7% debentures, due in 2025	85,770		85,175
Unamortized debt issuance costs	(44,105)		(37,009)
	2,862,040		2,380,666
Less amounts payable within one year	(29,250)		(24,250)
Total long-term debt	$	2,832,790	$	2,356,416

Senior Notes

Wendy’s Funding, LLC, a limited-purpose, bankruptcy-remote, wholly-owned indirect subsidiary of The Wendy’s Company, is the master issuer (the “Master Issuer”) of outstanding senior secured notes under a securitized financing facility that was entered into in June 2015. On April 1, 2022, the Master Issuer completed a financing transaction with respect to this facility under which the Master Issuer issued fixed rate senior secured notes in the following 2022-1 series: Class A-2-I with an initial principal amount of $100,000 and Class A-2-II with an initial principal amount of $400,000 (collectively, the “Series 2022-1 Class A-2 Notes”). Interest and principal payments on the Series 2022-1 Class A-2 Notes are payable on a quarterly basis. The legal final maturity date of the Series 2022-1 Class A-2 Notes is March 2052. If the Master Issuer has not repaid or refinanced the Series 2022-1 Class A-2 Notes prior to their respective anticipated repayment dates, additional interest will accrue pursuant to the indenture governing the Series 2022-1 Class A-2 Notes. The net proceeds from the sale of the Series 2022-1 Class A-2 Notes will be used for general corporate purposes, which may include funding for growth initiatives, return of capital to shareholders and debt retirement. The Series 2022-1 Class A-2 Notes have scheduled principal payments of $2,500 in 2022, $5,000 annually from 2023 through 2028, $97,500 in 2029, $4,000 annually from 2030 through 2031 and $362,000 in 2032.

The Series 2022-1 Class A-2 Notes are secured by a security interest in substantially all of the assets of the Master Issuer and certain other limited-purpose, bankruptcy-remote, wholly-owned indirect subsidiaries of the Company that act as guarantors, except for certain real estate assets and subject to certain limitations. The Series 2022-1 Class A-2 Notes are subject to substantially the same series of covenants and restrictions as the Company’s outstanding Series 2021-1 Class A-2 Notes, Series 2019-1 Class A-2 Notes and Series 2018-1 Class A-2 Notes.

Under the securitized financing facility, the Master Issuer has issued outstanding Series 2021-1 Variable Funding Senior Secured Notes, Class A-1 (the “Class A-1 Notes”), which allow for the drawing of up to $300,000 on a revolving basis using various credit instruments, including a letter of credit facility. No amounts were borrowed under the Class A-1 Notes during the six months ended July 3, 2022.

During the six months ended July 3, 2022, the Company incurred debt issuance costs of $10,232 in connection with the issuance of the Series 2022-1 Class A-2 Notes. The debt issuance costs will be amortized to “Interest expense, net” through the anticipated repayment dates of the Series 2022-1 Class A-2 Notes utilizing the effective interest rate method.

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Fair Value Measurements

6 Months Ended

Jul. 03, 2022

Fair Value Disclosures [Abstract]

Fair Value Measurements

Fair Value Measurements

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Valuation techniques under the accounting guidance related to fair value measurements are based on observable and unobservable inputs. Observable inputs reflect readily obtainable data from independent sources, while unobservable inputs reflect our market assumptions. These inputs are classified into the following hierarchy:

•Level 1 Inputs - Quoted prices for identical assets or liabilities in active markets.

•Level 2 Inputs - Quoted prices for similar assets or liabilities in active markets; quoted prices for identical or similar assets or liabilities in markets that are not active; and model-derived valuations whose inputs are observable or whose significant value drivers are observable.

•Level 3 Inputs - Pricing inputs are unobservable for the assets or liabilities and include situations where there is little, if any, market activity for the assets or liabilities. The inputs into the determination of fair value require significant management judgment or estimation.

Financial Instruments

The following table presents the carrying amounts and estimated fair values of the Company’s financial instruments:

	July 3, 2022				January 2, 2022
	Carrying Amount		Fair Value		Carrying Amount		Fair Value		Fair Value Measurements
Financial assets
Cash equivalents	$	415,679	$	415,679	$	—	$	—	Level 1
Other investments in equity securities (a)	12,107		12,107		10,000		10,000		Level 2
Financial liabilities
Series 2022-1 Class A-2-I Notes (b)	100,000		94,800		—		—		Level 2
Series 2022-1 Class A-2-II Notes (b)	400,000		376,000		—		—		Level 2
Series 2021-1 Class A-2-I Notes (b)	445,500		379,254		447,750		439,283		Level 2
Series 2021-1 Class A-2-II Notes (b)	643,500		533,912		646,750		642,352		Level 2
Series 2019-1 Class A-2-I Notes (b)	366,000		348,322		368,000		381,579		Level 2
Series 2019-1 Class A-2-II Notes (b)	411,750		384,122		414,000		439,792		Level 2
Series 2018-1 Class A-2-II Notes (b)	453,625		426,816		456,000		473,693		Level 2
7% debentures, due in 2025 (b)	85,770		91,467		85,175		101,142		Level 2

_______________

(a)The fair value of our other investments in equity securities is based on our review of information provided by the investment manager, which is based on observable price changes in orderly transactions for a similar investment of the same issuer.

(b)The fair values were based on quoted market prices in markets that are not considered active markets.

The carrying amounts of cash, accounts payable and accrued expenses approximate fair value due to the short-term nature of those items. The carrying amounts of accounts and notes receivable, net (both current and non-current) approximate fair value due to the effect of the related allowance for doubtful accounts. Our cash equivalents are the only financial assets measured and recorded at fair value on a recurring basis.

Non-Recurring Fair Value Measurements

Assets and liabilities remeasured to fair value on a non-recurring basis resulted in impairment that we have recorded to “Impairment of long-lived assets” in our condensed consolidated statements of operations.

Total impairment losses may reflect the impact of remeasuring long-lived assets held and used (including land, buildings, leasehold improvements, favorable lease assets and right-of-use assets) to fair value as a result of (1) declines in operating performance at Company-operated restaurants and (2) the Company’s decision to lease and/or sublease the land and/or buildings to franchisees in connection with the sale or anticipated sale of restaurants, including any subsequent lease modifications. The fair values of long-lived assets held and used presented in the tables below represent the remaining carrying value and were estimated based on either discounted cash flows of future anticipated lease and sublease income or discounted cash flows of future anticipated Company-operated restaurant performance.

Total impairment losses may also include the impact of remeasuring long-lived assets held for sale. The fair values of long-lived assets held for sale presented in the tables below represent the remaining carrying value and were estimated based on current market values. See Note 9 for further information on impairment of our long-lived assets.

			Fair Value Measurements
	July 3, 2022		Level 1		Level 2		Level 3
Held and used	$	952	$	—	$	—	$	952
Held for sale	2,275		—		—		2,275
Total	$	3,227	$	—	$	—	$	3,227

			Fair Value Measurements
	January 2, 2022		Level 1		Level 2		Level 3
Held and used	$	1,618	$	—	$	—	$	1,618
Held for sale	371		—		—		371
Total	$	1,989	$	—	$	—	$	1,989

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Impairment of Long-Lived Assets

6 Months Ended

Jul. 03, 2022

Asset Impairment Charges [Abstract]

Impairment of Long-Lived Assets

Impairment of Long-Lived Assets

The Company records impairment charges as a result of (1) the deterioration in operating performance of certain Company-operated restaurants, (2) the Company’s decision to lease and/or sublease properties to franchisees in connection with the sale or anticipated sale of Company-operated restaurants, including any subsequent lease modifications, and (3) closing Company-operated restaurants and classifying such surplus properties as held for sale.

The following is a summary of impairment losses recorded, which represent the excess of the carrying amount over the fair value of the affected assets and are included in “Impairment of long-lived assets:”

	Three Months Ended				Six Months Ended
	July 3, 2022		July 4, 2021		July 3, 2022		July 4, 2021
Company-operated restaurants	$	1,708	$	488	$	2,075	$	934
Restaurants leased or subleased to franchisees	—		—		194		189
Surplus properties	152		142		207		142
	$	1,860	$	630	$	2,476	$	1,265

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Income Taxes

6 Months Ended

Jul. 03, 2022

Income Tax Disclosure [Abstract]

Income Taxes

Income TaxesThe Company’s effective tax rate for the three months ended July 3, 2022 and July 4, 2021 was 26.4% and 18.6%, respectively. The Company’s effective tax rate varied from the U.S. federal statutory rate of 21% for the three months ended July 3, 2022 primarily due to state income taxes.

The Company’s effective tax rate for the six months ended July 3, 2022 and July 4, 2021 was 26.4% and 20.8%, respectively. The Company’s effective tax rate varied from the U.S. federal statutory rate of 21% for the six months ended July 3, 2022 primarily due to state income taxes.

There were no significant changes to the unrecognized tax benefits or related interest and penalties for the three and six months ended July 3, 2022. During the next twelve months, we believe it is reasonably possible the Company will reduce unrecognized tax benefits by up to $936 due to lapses of statutes of limitations.

The current portion of refundable income taxes was $8,266 and $11,901 as of July 3, 2022 and January 2, 2022, respectively, and is included in “Accounts and notes receivable, net.” There were no long-term refundable income taxes as of July 3, 2022 and January 2, 2022.

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Net Income Per Share

6 Months Ended

Jul. 03, 2022

Earnings Per Share [Abstract]

Net Income Per Share

Net Income Per Share

The calculation of basic and diluted net income per share was as follows:

	Three Months Ended				Six Months Ended
	July 3, 2022		July 4, 2021		July 3, 2022		July 4, 2021
Net income	$	48,151	$	65,724	$	85,553	$	107,090
Common stock:
Weighted average basic shares outstanding	213,673		221,874		214,646		222,604
Dilutive effect of stock options and restricted shares	1,569		3,526		2,058		3,459
Weighted average diluted shares outstanding	215,242		225,400		216,704		226,063
Net income per share:
Basic	$	.23	$	.30	$	.40	$	.48
Diluted	$	.22	$	.29	$	.39	$	.47

Basic net income per share for the three and six months ended July 3, 2022 and July 4, 2021 was computed by dividing net income amounts by the weighted average number of shares of common stock outstanding. Diluted net income per share was computed by dividing net income by the weighted average number of basic shares outstanding plus the potential common share effect of dilutive stock options and restricted shares. We excluded potential common shares of 5,538 and 4,417 for the three and six months ended July 3, 2022, respectively, and 1,825 and 1,847 for the three and six months ended July 4, 2021, respectively, from our diluted net income per share calculation as they would have had anti-dilutive effects.

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Stockholders' Equity

6 Months Ended

Jul. 03, 2022

Equity [Abstract]

Stockholders' Equity

Stockholders’ Equity

Dividends

During each of the first and second quarters of 2022, the Company paid quarterly dividends per share of $.125. During the first and second quarters of 2021, the Company paid dividends per share of $.09 and $.10, respectively.

Repurchases of Common Stock

In February 2022, our Board of Directors authorized a repurchase program for up to $100,000 of our common stock through February 28, 2023, when and if market conditions warrant and to the extent legally permissible (the “February 2022 Authorization”). On April 1, 2022, the Company’s Board of Directors approved an increase of $150,000 to the February 2022 Authorization, resulting in an aggregate authorization of $250,000 that continues to expire on February 28, 2023. During the six months ended July 3, 2022, the Company repurchased 2,759 shares under the February 2022 Authorization with an aggregate purchase price of $51,911, excluding commissions of $39. As of July 3, 2022, the Company had $198,089 of

availability remaining under its February 2022 authorization. Subsequent to July 3, 2022 through August 9, 2022, no shares were repurchased under the February 2022 Authorization.

In February 2020, our Board of Directors authorized a repurchase program for up to $100,000 of our common stock through February 28, 2021, when and if market conditions warranted and to the extent legally permissible (the “February 2020 Authorization”). In July 2020, the Company’s Board of Directors approved an extension of the February 2020 Authorization by one year, through February 28, 2022. In addition, in May 2021, August 2021 and November 2021, the Board of Directors approved increases of $50,000, $70,000 and $80,000, respectively, to the February 2020 Authorization, resulting in an aggregate authorization of $300,000 that continued to expire on February 28, 2022. In November 2021, the Company entered into an accelerated share repurchase agreement (the “2021 ASR Agreement”) with a third-party financial institution to repurchase common stock as part of the February 2020 Authorization. Under the 2021 ASR Agreement, the Company paid the financial institution an initial purchase price of $125,000 in cash and received an initial delivery of 4,910 shares of common stock, representing an estimated 85% of the total shares expected to be delivered under the 2021 ASR Agreement. In February 2022, the Company completed the 2021 ASR Agreement and received an additional 715 shares of common stock. The total number of shares of common stock ultimately purchased by the Company under the 2021 ASR Agreement was based on the average of the daily volume-weighted average prices of the common stock during the term of the 2021 ASR Agreement, less an agreed upon discount. In total, 5,625 shares were delivered under the 2021 ASR Agreement at an average purchase price of $22.22 per share. With the completion of the 2021 ASR Agreement in February 2022 as described above, the Company completed the February 2020 Authorization.

During the six months ended July 4, 2021, the Company repurchased 3,956 shares under the February 2020 Authorization with an aggregate purchase price of $83,320, of which $440 was accrued at July 4, 2021, and excluding commissions of $55.

Accumulated Other Comprehensive Loss

The following table provides a rollforward of accumulated other comprehensive loss, which is entirely comprised of foreign currency translation:

	Six Months Ended
	July 3, 2022		July 4, 2021
Balance at beginning of period	$	(48,200)	$	(49,641)
Foreign currency translation	(6,337)		5,567
Balance at end of period	$	(54,537)	$	(44,074)

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Leases

6 Months Ended

Jul. 03, 2022

Leases [Abstract]

Leases, Company as Lessee

Leases

Nature of Leases

The Company operates restaurants that are located on sites owned by us and sites leased by us from third parties. In addition, the Company owns sites and leases sites from third parties, which it leases and/or subleases to franchisees. At July 3, 2022, Wendy’s and its franchisees operated 7,040 Wendy’s restaurants. Of the 411 Company-operated Wendy’s restaurants, Wendy’s owned the land and building for 157 restaurants, owned the building and held long-term land leases for 143 restaurants and held leases covering the land and building for 111 restaurants. Wendy’s also owned 489 and leased 1,211 properties that were either leased or subleased principally to franchisees. The Company also leases restaurant, office and transportation equipment.

Company as Lessee

The components of lease cost are as follows:

	Three Months Ended				Six Months Ended
	July 3, 2022		July 4, 2021		July 3, 2022		July 4, 2021
Finance lease cost:
Amortization of finance lease assets	$	4,106	$	3,251	$	8,170	$	6,759
Interest on finance lease liabilities	10,693		10,267		21,338		20,560
	14,799		13,518		29,508		27,319
Operating lease cost	22,324		23,012		42,985		46,373
Variable lease cost (a)	16,456		16,583		31,259		31,771
Short-term lease cost	1,405		1,270		2,838		2,596
Total operating lease cost (b)	40,185		40,865		77,082		80,740
Total lease cost	$	54,984	$	54,383	$	106,590	$	108,059

_______________

(a)Includes expenses for executory costs of $9,245 and $10,087 for the three months ended July 3, 2022 and July 4, 2021, respectively, and $18,853 and $20,150 for the six months ended July 3, 2022 and July 4, 2021, respectively, for which the Company is reimbursed by sublessees.

(b)Includes $32,071 and $34,063 for the three months ended July 3, 2022 and July 4, 2021, respectively, and $60,996 and $66,615 for the six months ended July 3, 2022 and July 4, 2021, respectively, recorded to “Franchise rental expense” for leased properties that are subsequently leased to franchisees. Also includes $7,479 and $6,111 for the three months ended July 3, 2022 and July 4, 2021, respectively, and $14,773 and $12,792 for the six months ended July 3, 2022 and July 4, 2021, respectively, recorded to “Cost of sales” for leases for Company-operated restaurants.

Leases, Company as Lessor

Company as Lessor

The components of lease income are as follows:

	Three Months Ended				Six Months Ended
	July 3, 2022		July 4, 2021		July 3, 2022		July 4, 2021
Sales-type and direct-financing leases:
Selling profit	$	1,677	$	1,627	$	2,157	$	3,539
Interest income (a)	7,753		7,586		15,493		15,075
Operating lease income	42,174		44,356		85,488		88,478
Variable lease income	16,436		16,512		30,993		31,266
Franchise rental income (b)	$	58,610	$	60,868	$	116,481	$	119,744

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(a)Included in “Interest expense, net.”

(b)Includes sublease income of $43,689 and $45,245 recognized during the three months ended July 3, 2022 and July 4, 2021, respectively, and $86,854 and $88,495 recognized during the six months ended July 3, 2022 and July 4, 2021, respectively. Sublease income includes lessees’ variable payments to the Company for executory costs of $9,250 and $10,195 for the three months ended July 3, 2022 and July 4, 2021, respectively, and $18,785 and $20,069 for the six months ended July 3, 2022 and July 4, 2021, respectively.

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Supplemental Cash Flow Information

6 Months Ended

Jul. 03, 2022

Supplemental Cash Flow Elements [Abstract]

Supplemental Cash Flow Information

Supplemental Cash Flow Information

The following table includes supplemental non-cash investing and financing activities:

	Six Months Ended
	July 3, 2022		July 4, 2021
Supplemental non-cash investing and financing activities:
Capital expenditures included in accounts payable	$	5,955	$	7,242
Finance leases	18,984		30,863

The following table includes a reconciliation of cash, cash equivalents and restricted cash:

	July 3, 2022		January 2, 2022
Reconciliation of cash, cash equivalents and restricted cash at end of period:
Cash and cash equivalents	$	700,813	$	249,438
Restricted cash	33,997		27,535
Restricted cash, included in Advertising funds restricted assets	61,838		89,993
Total cash, cash equivalents and restricted cash	$	796,648	$	366,966

Franchise Development Fund

In August 2021, the Company announced the creation of a $100,000 strategic build to suit development fund to drive additional new restaurant growth. The Company expects the development fund to drive approximately 80 to 90 new franchise restaurants from 2022 to 2025. Capital expenditures related to the fund are included in “Franchise development fund” in the condensed consolidated statements of cash flows.

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Transactions with Related Parties

6 Months Ended

Jul. 03, 2022

Related Party Transactions [Abstract]

Transactions with Related Parties

Transactions with Related Parties

Except as described below, the Company did not have any significant changes in or transactions with its related parties during the current fiscal period since those reported in the Form 10-K.

TimWen Lease and Management Fee Payments

A wholly-owned subsidiary of Wendy’s leases restaurant facilities from TimWen, which are then subleased to franchisees for the operation of Wendy’s/Tim Hortons combo units in Canada. During the six months ended July 3, 2022 and July 4, 2021, Wendy’s paid TimWen $9,601 and $8,817, respectively, under these lease agreements. In addition, TimWen paid Wendy’s a management fee under the TimWen joint venture agreement of $111 and $110 during the six months ended July 3, 2022 and July 4, 2021, respectively, which has been included as a reduction to “General and administrative.”

Transactions with Yellow Cab

Certain family members and affiliates of Mr. Nelson Peltz, our Chairman, and Mr. Peter May, our Senior Vice Chairman, as well as Mr. Matthew Peltz, our Vice Chairman, hold indirect, minority ownership interests in Yellow Cab Holdings, LLC (“Yellow Cab”) and operating companies managed by Yellow Cab, a Wendy’s franchisee, that as of July 3, 2022 owned and operated 82 Wendy’s restaurants. During the six months ended July 3, 2022 and July 4, 2021, the Company recognized $6,476 and $4,353, respectively, in royalty, advertising fund, lease and other income from Yellow Cab and related entities. As of July 3, 2022 and January 2, 2022, $1,046 and $974, respectively, was due from Yellow Cab for such income, which is included in “Accounts and notes receivable, net” and “Advertising funds restricted assets.”

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Guarantees and Other Commitments and Contingencies

6 Months Ended

Jul. 03, 2022

Commitments and Contingencies Disclosure [Abstract]

Guarantees and Other Commitments and Contingencies

Guarantees and Other Commitments and Contingencies

Except as described below, the Company did not have any significant changes in guarantees and other commitments and contingencies during the current fiscal period since those reported in the Form 10-K. Refer to the Form 10-K for further information regarding the Company’s additional commitments and obligations.

Lease Guarantees

Wendy’s has guaranteed the performance of certain leases and other obligations, primarily from former Company-operated restaurant locations now operated by franchisees, amounting to $88,778 as of July 3, 2022. These leases extend through 2045. We have had no judgments against us as guarantor of these leases as of July 3, 2022. In the event of default by a franchise owner where Wendy’s is called upon to perform under its guarantee, Wendy’s has the ability to pursue repayment from the franchise owner. The liability recorded for our probable exposure associated with these lease guarantees was not material as of July 3, 2022.

Letters of Credit

As of July 3, 2022, the Company had outstanding letters of credit with various parties totaling $28,633. Substantially all of the outstanding letters of credit include amounts outstanding against the 2021-1 Class A-1 Notes. See Note 7 for further information. We do not expect any material loss to result from these letters of credit.

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Legal and Environmental Matters

6 Months Ended

Jul. 03, 2022

Loss Contingency [Abstract]

Legal and Environmental Matters

Legal and Environmental Matters

The Company is involved in litigation and claims incidental to our business. We provide accruals for such litigation and claims when payment is probable and reasonably estimable. We believe we have adequate accruals for all of our legal and environmental matters. We cannot estimate the aggregate possible range of loss for our existing litigation and claims for various reasons, including, but not limited to, many proceedings being in preliminary stages, with various motions either yet to be submitted or pending, discovery yet to occur and/or significant factual matters unresolved. In addition, most cases seek an indeterminate amount of damages and many involve multiple parties. Predicting the outcomes of settlement discussions or judicial or arbitral decisions is thus inherently difficult and future developments could cause these actions or claims, individually or in aggregate, to have a material adverse effect on the Company’s financial condition, results of operations, or cash flows of a particular reporting period.

We previously described certain legal proceedings in the Form 10-K. As of July 3, 2022, there were no material developments in those legal proceedings.

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Segment Information (Notes)

6 Months Ended

Jul. 03, 2022

Segment Reporting [Abstract]

Segment Information

Segment Information

Revenues by segment were as follows:

	Three Months Ended				Six Months Ended
	July 3, 2022		July 4, 2021		July 3, 2022		July 4, 2021
Wendy’s U.S.	$	450,440	$	409,843	$	857,751	$	791,797
Wendy’s International	27,463		21,316		50,369		39,566
Global Real Estate & Development	59,880		62,178		118,306		122,177
Total revenues	$	537,783	$	493,337	$	1,026,426	$	953,540

The following table reconciles profit by segment to the Company’s consolidated income before income taxes:

	Three Months Ended				Six Months Ended
	July 3, 2022		July 4, 2021		July 3, 2022		July 4, 2021
Wendy’s U.S. (a)	$	126,999	$	126,650	$	231,823	$	238,737
Wendy’s International (b)	9,350		6,528		14,803		14,212
Global Real Estate & Development	27,283		26,569		54,890		52,822
Total segment profit	$	163,632	$	159,747	$	301,516	$	305,771
Unallocated franchise support and other costs	—		—		6		—
Advertising funds deficit	(1,375)		(1,602)		(2,618)		(2,866)
Unallocated general and administrative (c)	(30,989)		(28,864)		(61,994)		(53,971)
Depreciation and amortization	(33,428)		(30,761)		(66,659)		(62,303)
System optimization gains, net	152		30,766		3,686		31,282
Reorganization and realignment costs	(156)		(2,102)		(620)		(7,036)
Impairment of long-lived assets	(1,860)		(630)		(2,476)		(1,265)
Unallocated other operating income, net	305		192		321		256
Interest expense, net	(32,125)		(28,204)		(58,490)		(56,990)
Loss on early extinguishment of debt	—		(17,917)		—		(17,917)
Investment (loss) income, net	(4)		3		2,107		6
Other income, net	1,238		158		1,445		284
Income before income taxes	$	65,390	$	80,786	$	116,224	$	135,251

_______________

(a)Wendy’s U.S. includes advertising fund expense of $2,766 and $5,322 for the three and six months ended July 3, 2022, respectively, and $3,990 and $7,524 for the three and six months ended July 4, 2021, respectively, related to the Company’s funding of incremental advertising.

(b)Wendy’s International includes advertising fund expense of $1,084 and $1,922 for the three and six months ended July 3, 2022, respectively, related to the Company’s funding of incremental advertising. In addition, Wendy’s International includes other international-related advertising expense of $880 and $1,522 for the three and six months ended July 3, 2022, respectively.

(c)Includes corporate overhead costs, such as employee compensation and related benefits.

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New Accounting Standards

6 Months Ended

Jul. 03, 2022

Accounting Standards Update and Change in Accounting Principle [Abstract]

New Accounting Standards

New Accounting Standards

Financial Instruments

In August 2020, the Financial Accounting Standards Board (“FASB”) issued an amendment that simplifies the accounting for certain financial instruments with characteristics of liabilities and equity, including convertible instruments and contracts on an entity’s own equity. The amendment simplifies accounting for convertible instruments by removing major separation models required under current accounting guidance. In addition, the amendment removes certain settlement conditions that are required for equity contracts to qualify for the derivative scope exception, which will permit more equity contracts to qualify for the exception, and also simplifies the diluted earnings per share calculation in certain areas. The Company adopted this amendment during the first quarter of 2022. The adoption of this guidance did not have a material impact on our condensed consolidated financial statements.

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Basis of Presentation (Tables)

6 Months Ended

Jul. 03, 2022

Prior Period Adjustment [Abstract]

Schedule of Prior Period Adjustments

The following table illustrates the reclassifications made to the condensed consolidated statement of cash flows for the six months ended July 4, 2021:

	As Previously Reported		Reclassifications		As Currently Reported
Cloud computing arrangements expenditures	$	—	$	(2,412)	$	(2,412)
Changes in operating assets and liabilities and other, net	(13,536)		2,412		(11,124)

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Revenue (Tables)

6 Months Ended

Jul. 03, 2022

Revenue [Abstract]

Disaggregation of Revenue

The following tables disaggregate revenue by segment and source:

	Wendy’s U.S.		Wendy’s International		Global Real Estate & Development		Total
Three Months Ended July 3, 2022
Sales at Company-operated restaurants	$	227,903	$	2,966	$	—	$	230,869
Franchise royalty revenue	108,872		16,141		—		125,013
Franchise fees	15,986		1,167		1,270		18,423
Franchise rental income	—		—		58,610		58,610
Advertising funds revenue	97,679		7,189		—		104,868
Total revenues	$	450,440	$	27,463	$	59,880	$	537,783
Six Months Ended July 3, 2022
Sales at Company-operated restaurants	$	434,404	$	5,740	$	—	$	440,144
Franchise royalty revenue	206,792		29,966		—		236,758
Franchise fees	31,391		2,438		1,825		35,654
Franchise rental income	—		—		116,481		116,481
Advertising funds revenue	185,164		12,225		—		197,389
Total revenues	$	857,751	$	50,369	$	118,306	$	1,026,426
Three Months Ended July 4, 2021
Sales at Company-operated restaurants	$	193,279	$	246	$	—	$	193,525
Franchise royalty revenue	106,006		13,560		—		119,566
Franchise fees	14,331		1,454		1,310		17,095
Franchise rental income	—		—		60,868		60,868
Advertising funds revenue	96,227		6,056		—		102,283
Total revenues	$	409,843	$	21,316	$	62,178	$	493,337
Six Months Ended July 4, 2021
Sales at Company-operated restaurants	$	382,336	$	246	$	—	$	382,582
Franchise royalty revenue	202,770		25,130		—		227,900
Franchise fees	26,261		2,897		2,433		31,591
Franchise rental income	—		—		119,744		119,744
Advertising funds revenue	180,430		11,293		—		191,723
Total revenues	$	791,797	$	39,566	$	122,177	$	953,540

Contract balances, assets and liabilities

The following table provides information about receivables and contract liabilities (deferred franchise fees) from contracts with customers:

	July 3, 2022 (a)		January 2, 2022 (a)
Receivables, which are included in “Accounts and notes receivable, net” (b)	$	57,838	$	49,168
Receivables, which are included in “Advertising funds restricted assets”	66,918		65,497
Deferred franchise fees (c)	99,108		97,186

_______________

(a)Excludes funds collected from the sale of gift cards, which are primarily reimbursed to franchisees upon redemption at franchised restaurants and do not ultimately result in the recognition of revenue in the Company’s condensed consolidated statements of operations.

(b)Includes receivables related to “Sales” and “Franchise royalty revenue and fees.”

(c)Deferred franchise fees are included in “Accrued expenses and other current liabilities” and “Deferred franchise fees” and totaled $9,862 and $89,246, respectively, as of July 3, 2022, and $9,084 and $88,102, respectively, as of January 2, 2022.

Deferred franchise fee rollforward

Significant changes in deferred franchise fees are as follows:

	Six Months Ended
	July 3, 2022		July 4, 2021
Deferred franchise fees at beginning of period	$	97,186	$	97,785
Revenue recognized during the period	(5,037)		(6,845)
New deferrals due to cash received and other	6,959		7,469
Deferred franchise fees at end of period	$	99,108	$	98,409

Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction

The following table reflects the estimated franchise fees to be recognized in the future related to performance obligations that are unsatisfied at the end of the period:

Estimate for fiscal year:
2022 (a)	$	6,831
2023	6,440
2024	6,260
2025	6,084
2026	5,975
Thereafter	67,518
	$	99,108

_______________

(a)Represents franchise fees expected to be recognized for the remainder of 2022, which includes development-related franchise fees expected to be recognized over a duration of one year or less.

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System Optimization Gains, Net (Tables)

6 Months Ended

Jul. 03, 2022

System optimization gains, net

Summary of Disposition Activity

The following is a summary of the disposition activity recorded as a result of our system optimization initiative:

	Three Months Ended				Six Months Ended
	July 3, 2022		July 4, 2021		July 3, 2022		July 4, 2021
Number of restaurants sold to franchisees	—		47		—		47
Proceeds from sales of restaurants (a)	$	—	$	50,518	$	—	$	50,518
Net assets sold (b)	—		(16,939)		—		(16,939)
Goodwill related to sales of restaurants	—		(4,847)		—		(4,847)
Net unfavorable leases (c)	—		(2,939)		—		(2,939)
Gain on sales-type leases	—		7,156		—		7,156
Other (d)	—		(2,148)		—		(2,148)
	—		30,801		—		30,801
Post-closing adjustments on sales of restaurants (e)	75		—		3,522		515
Gain on sales of restaurants, net	75		30,801		3,522		31,316
Gain (loss) on sales of other assets, net (f)	77		(35)		164		(34)
System optimization gains, net	$	152	$	30,766	$	3,686	$	31,282

_______________

(a)In addition to the proceeds noted herein, the Company received cash proceeds of $63 and $158 during the three and six months ended July 3, 2022, respectively, related to a note receivable issued in connection with the sale of the Manhattan Company-operated restaurants.

(b)Net assets sold consisted primarily of equipment.

(c)During the three and six months ended July 4, 2021, the Company recorded favorable lease assets of $3,799 and unfavorable lease liabilities of $6,738 as a result of leasing and/or subleasing land, buildings and/or leasehold improvements to franchisees, in connection with the sale of the New York Company-operated restaurants (including Manhattan).

(d)The three and six months ended July 4, 2021 include a deferred gain of $3,500 as a result of certain contingencies related to the extension of lease terms.

(e)Represents the recognition of deferred gains as a result of the resolution of certain contingencies related to the extension of lease terms for restaurants previously sold to franchisees.

(f)During the three and six months ended July 3, 2022, the Company received net cash proceeds of $690 and $858, respectively, primarily from the sale of surplus and other properties. During the three and six months ended July 4, 2021, the Company received net cash proceeds of $10 and $13, respectively, primarily from the sale of surplus and other properties.

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Reorganization and Realignment Costs (Tables)

6 Months Ended

Jul. 03, 2022

Restructuring Cost and Reserve

Restructuring and Related Costs

The following is a summary of the initiatives included in “Reorganization and realignment costs:”

	Three Months Ended				Six Months Ended
	July 3, 2022		July 4, 2021		July 3, 2022		July 4, 2021
System optimization initiative	$	134	$	897	$	541	$	5,575
Other reorganization and realignment plans	22		1,205		79		1,461
Reorganization and realignment costs	$	156	$	2,102	$	620	$	7,036

System Optimization Initiative

Restructuring Cost and Reserve

Restructuring and Related Costs

The following is a summary of the costs recorded as a result of our system optimization initiative:

	Three Months Ended				Six Months Ended				Total Incurred Since Inception
	July 3, 2022		July 4, 2021		July 3, 2022		July 4, 2021
Severance and related employee costs	$	—	$	661	$	—	$	661	$	18,898
Professional fees	80		504		374		739		24,051
Other (a)	37		—		133		1,354		7,751
	117		1,165		507		2,754		50,700
Accelerated depreciation and amortization (b)	—		—		—		—		25,398
NPC lease termination costs (c)	17		(268)		34		2,821		2,890
Share-based compensation (d)	—		—		—		—		5,013
Total system optimization initiative	$	134	$	897	$	541	$	5,575	$	84,001

_______________

(a)The six months ended July 4, 2021 includes transaction fees of $1,350 associated with the NPC bankruptcy sale process.

(b)Primarily includes accelerated amortization of previously acquired franchise rights related to the Company-operated restaurants in territories that have been sold to franchisees in connection with our system optimization initiative.

(c)The six months ended July 4, 2021 includes the write-off of lease assets of $1,341 and lease termination fees paid of $1,480.

(d)Represents incremental share-based compensation resulting from the modification of stock options and performance-based awards in connection with the termination of employees under our system optimization initiative.

Schedule of Restructuring Reserve by Type of Cost

The tables below present a rollforward of our accruals for our system optimization initiative, which were included in “Accrued expenses and other current liabilities” as of January 3, 2021.

	Balance January 2, 2022		Charges		Payments		Balance July 3, 2022
Professional fees	$	—	$	374	$	(374)	$	—
Other	—		133		(133)		—
	$	—	$	507	$	(507)	$	—

	Balance January 3, 2021		Charges		Payments		Balance July 4, 2021
Severance and related employee costs	$	—	$	661	$	(661)	$	—
Professional fees	1,230		739		(1,969)		—
Other	—		1,354		(1,354)		—
	$	1,230	$	2,754	$	(3,984)	$	—

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Investments (Tables)

6 Months Ended

Jul. 03, 2022

Schedule of Equity Method Investments

Schedule of Equity Method Investments and Other Investments in Equity Securities

The following is a summary of the carrying value of our investments:

	July 3, 2022		January 2, 2022
Equity method investments	$	38,088	$	39,870
Other investments in equity securities	12,107		10,000
	$	50,195	$	49,870

Schedule of Equity Method Investments

Presented below is activity related to our investment in TimWen and the Brazil JV included in our condensed consolidated financial statements:

	Six Months Ended
	July 3, 2022		July 4, 2021
Balance at beginning of period	$	39,870	$	44,574
Equity in earnings for the period	5,736		4,921
Amortization of purchase price adjustments (a)	(1,455)		(1,658)
	4,281		3,263
Distributions received	(5,389)		(5,617)
Foreign currency translation adjustment included in “Other comprehensive (loss) income” and other	(674)		1,456
Balance at end of period	$	38,088	$	43,676

_______________

(a)Purchase price adjustments that impacted the carrying value of the Company’s investment in TimWen are being amortized over the average original aggregate life of 21 years.

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Long-Term Debt (Tables)

6 Months Ended

Jul. 03, 2022

Debt Disclosure [Abstract]

Long-term debt

Long-term debt consisted of the following:

	July 3, 2022		January 2, 2022
Series 2022-1 Class A-2 Notes:
4.236% Series 2022-1 Class A-2-I Notes, anticipated repayment date 2029	$	100,000	$	—
4.535% Series 2022-1 Class A-2-II Notes, anticipated repayment date 2032	400,000		—
Series 2021-1 Class A-2 Notes:
2.370% Series 2021-1 Class A-2-I Notes, anticipated repayment date 2029	445,500		447,750
2.775% Series 2021-1 Class A-2-II Notes, anticipated repayment date 2031	643,500		646,750
Series 2019-1 Class A-2 Notes:
3.783% Series 2019-1 Class A-2-I Notes, anticipated repayment date 2026	366,000		368,000
4.080% Series 2019-1 Class A-2-II Notes, anticipated repayment date 2029	411,750		414,000
Series 2018-1 Class A-2 Notes:
3.884% Series 2018-1 Class A-2-II Notes, anticipated repayment date 2028	453,625		456,000
7% debentures, due in 2025	85,770		85,175
Unamortized debt issuance costs	(44,105)		(37,009)
	2,862,040		2,380,666
Less amounts payable within one year	(29,250)		(24,250)
Total long-term debt	$	2,832,790	$	2,356,416

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Fair Value Measurements (Tables)

6 Months Ended

Jul. 03, 2022

Fair Value Disclosures [Abstract]

Fair Value, by Balance Sheet Grouping

The following table presents the carrying amounts and estimated fair values of the Company’s financial instruments:

	July 3, 2022				January 2, 2022
	Carrying Amount		Fair Value		Carrying Amount		Fair Value		Fair Value Measurements
Financial assets
Cash equivalents	$	415,679	$	415,679	$	—	$	—	Level 1
Other investments in equity securities (a)	12,107		12,107		10,000		10,000		Level 2
Financial liabilities
Series 2022-1 Class A-2-I Notes (b)	100,000		94,800		—		—		Level 2
Series 2022-1 Class A-2-II Notes (b)	400,000		376,000		—		—		Level 2
Series 2021-1 Class A-2-I Notes (b)	445,500		379,254		447,750		439,283		Level 2
Series 2021-1 Class A-2-II Notes (b)	643,500		533,912		646,750		642,352		Level 2
Series 2019-1 Class A-2-I Notes (b)	366,000		348,322		368,000		381,579		Level 2
Series 2019-1 Class A-2-II Notes (b)	411,750		384,122		414,000		439,792		Level 2
Series 2018-1 Class A-2-II Notes (b)	453,625		426,816		456,000		473,693		Level 2
7% debentures, due in 2025 (b)	85,770		91,467		85,175		101,142		Level 2

_______________

(a)The fair value of our other investments in equity securities is based on our review of information provided by the investment manager, which is based on observable price changes in orderly transactions for a similar investment of the same issuer.

(b)The fair values were based on quoted market prices in markets that are not considered active markets.

Fair value of assets and liabilities (other than cash and cash equivalents) measured at fair value on a nonrecurring basis

			Fair Value Measurements
	July 3, 2022		Level 1		Level 2		Level 3
Held and used	$	952	$	—	$	—	$	952
Held for sale	2,275		—		—		2,275
Total	$	3,227	$	—	$	—	$	3,227

			Fair Value Measurements
	January 2, 2022		Level 1		Level 2		Level 3
Held and used	$	1,618	$	—	$	—	$	1,618
Held for sale	371		—		—		371
Total	$	1,989	$	—	$	—	$	1,989

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Impairment of Long-Lived Assets (Tables)

6 Months Ended

Jul. 03, 2022

Asset Impairment Charges [Abstract]

Impairment of Long-Lived Assets

The following is a summary of impairment losses recorded, which represent the excess of the carrying amount over the fair value of the affected assets and are included in “Impairment of long-lived assets:”

	Three Months Ended				Six Months Ended
	July 3, 2022		July 4, 2021		July 3, 2022		July 4, 2021
Company-operated restaurants	$	1,708	$	488	$	2,075	$	934
Restaurants leased or subleased to franchisees	—		—		194		189
Surplus properties	152		142		207		142
	$	1,860	$	630	$	2,476	$	1,265

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Net Income Per Share (Tables)

6 Months Ended

Jul. 03, 2022

Earnings Per Share [Abstract]

Schedule of Earnings Per Share, Basic and Diluted

The calculation of basic and diluted net income per share was as follows:

	Three Months Ended				Six Months Ended
	July 3, 2022		July 4, 2021		July 3, 2022		July 4, 2021
Net income	$	48,151	$	65,724	$	85,553	$	107,090
Common stock:
Weighted average basic shares outstanding	213,673		221,874		214,646		222,604
Dilutive effect of stock options and restricted shares	1,569		3,526		2,058		3,459
Weighted average diluted shares outstanding	215,242		225,400		216,704		226,063
Net income per share:
Basic	$	.23	$	.30	$	.40	$	.48
Diluted	$	.22	$	.29	$	.39	$	.47

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Stockholders' Equity (Tables)

6 Months Ended

Jul. 03, 2022

Equity [Abstract]

Schedule of Accumulated Other Comprehensive Loss

The following table provides a rollforward of accumulated other comprehensive loss, which is entirely comprised of foreign currency translation:

	Six Months Ended
	July 3, 2022		July 4, 2021
Balance at beginning of period	$	(48,200)	$	(49,641)
Foreign currency translation	(6,337)		5,567
Balance at end of period	$	(54,537)	$	(44,074)

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Leases (Tables)

6 Months Ended

Jul. 03, 2022

Leases [Abstract]

Lease, Cost

The components of lease cost are as follows:

	Three Months Ended				Six Months Ended
	July 3, 2022		July 4, 2021		July 3, 2022		July 4, 2021
Finance lease cost:
Amortization of finance lease assets	$	4,106	$	3,251	$	8,170	$	6,759
Interest on finance lease liabilities	10,693		10,267		21,338		20,560
	14,799		13,518		29,508		27,319
Operating lease cost	22,324		23,012		42,985		46,373
Variable lease cost (a)	16,456		16,583		31,259		31,771
Short-term lease cost	1,405		1,270		2,838		2,596
Total operating lease cost (b)	40,185		40,865		77,082		80,740
Total lease cost	$	54,984	$	54,383	$	106,590	$	108,059

_______________

(a)Includes expenses for executory costs of $9,245 and $10,087 for the three months ended July 3, 2022 and July 4, 2021, respectively, and $18,853 and $20,150 for the six months ended July 3, 2022 and July 4, 2021, respectively, for which the Company is reimbursed by sublessees.

(b)Includes $32,071 and $34,063 for the three months ended July 3, 2022 and July 4, 2021, respectively, and $60,996 and $66,615 for the six months ended July 3, 2022 and July 4, 2021, respectively, recorded to “Franchise rental expense” for leased properties that are subsequently leased to franchisees. Also includes $7,479 and $6,111 for the three months ended July 3, 2022 and July 4, 2021, respectively, and $14,773 and $12,792 for the six months ended July 3, 2022 and July 4, 2021, respectively, recorded to “Cost of sales” for leases for Company-operated restaurants.

Lease, Income

The components of lease income are as follows:

	Three Months Ended				Six Months Ended
	July 3, 2022		July 4, 2021		July 3, 2022		July 4, 2021
Sales-type and direct-financing leases:
Selling profit	$	1,677	$	1,627	$	2,157	$	3,539
Interest income (a)	7,753		7,586		15,493		15,075
Operating lease income	42,174		44,356		85,488		88,478
Variable lease income	16,436		16,512		30,993		31,266
Franchise rental income (b)	$	58,610	$	60,868	$	116,481	$	119,744

_______________

(a)Included in “Interest expense, net.”

(b)Includes sublease income of $43,689 and $45,245 recognized during the three months ended July 3, 2022 and July 4, 2021, respectively, and $86,854 and $88,495 recognized during the six months ended July 3, 2022 and July 4, 2021, respectively. Sublease income includes lessees’ variable payments to the Company for executory costs of $9,250 and $10,195 for the three months ended July 3, 2022 and July 4, 2021, respectively, and $18,785 and $20,069 for the six months ended July 3, 2022 and July 4, 2021, respectively.

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Supplemental Cash Flow Information (Tables)

6 Months Ended

Jul. 03, 2022

Supplemental Cash Flow Elements [Abstract]

Supplemental Cash Flow Information

The following table includes supplemental non-cash investing and financing activities:

	Six Months Ended
	July 3, 2022		July 4, 2021
Supplemental non-cash investing and financing activities:
Capital expenditures included in accounts payable	$	5,955	$	7,242
Finance leases	18,984		30,863

The following table includes a reconciliation of cash, cash equivalents and restricted cash:

	July 3, 2022		January 2, 2022
Reconciliation of cash, cash equivalents and restricted cash at end of period:
Cash and cash equivalents	$	700,813	$	249,438
Restricted cash	33,997		27,535
Restricted cash, included in Advertising funds restricted assets	61,838		89,993
Total cash, cash equivalents and restricted cash	$	796,648	$	366,966

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Segment Information (Tables)

6 Months Ended

Jul. 03, 2022

Segment Reporting [Abstract]

Reconciliation of Revenue from Segments to Consolidated

Revenues by segment were as follows:

	Three Months Ended				Six Months Ended
	July 3, 2022		July 4, 2021		July 3, 2022		July 4, 2021
Wendy’s U.S.	$	450,440	$	409,843	$	857,751	$	791,797
Wendy’s International	27,463		21,316		50,369		39,566
Global Real Estate & Development	59,880		62,178		118,306		122,177
Total revenues	$	537,783	$	493,337	$	1,026,426	$	953,540

Reconciliation of Profit from Segments to Consolidated

The following table reconciles profit by segment to the Company’s consolidated income before income taxes:

	Three Months Ended				Six Months Ended
	July 3, 2022		July 4, 2021		July 3, 2022		July 4, 2021
Wendy’s U.S. (a)	$	126,999	$	126,650	$	231,823	$	238,737
Wendy’s International (b)	9,350		6,528		14,803		14,212
Global Real Estate & Development	27,283		26,569		54,890		52,822
Total segment profit	$	163,632	$	159,747	$	301,516	$	305,771
Unallocated franchise support and other costs	—		—		6		—
Advertising funds deficit	(1,375)		(1,602)		(2,618)		(2,866)
Unallocated general and administrative (c)	(30,989)		(28,864)		(61,994)		(53,971)
Depreciation and amortization	(33,428)		(30,761)		(66,659)		(62,303)
System optimization gains, net	152		30,766		3,686		31,282
Reorganization and realignment costs	(156)		(2,102)		(620)		(7,036)
Impairment of long-lived assets	(1,860)		(630)		(2,476)		(1,265)
Unallocated other operating income, net	305		192		321		256
Interest expense, net	(32,125)		(28,204)		(58,490)		(56,990)
Loss on early extinguishment of debt	—		(17,917)		—		(17,917)
Investment (loss) income, net	(4)		3		2,107		6
Other income, net	1,238		158		1,445		284
Income before income taxes	$	65,390	$	80,786	$	116,224	$	135,251

_______________

(a)Wendy’s U.S. includes advertising fund expense of $2,766 and $5,322 for the three and six months ended July 3, 2022, respectively, and $3,990 and $7,524 for the three and six months ended July 4, 2021, respectively, related to the Company’s funding of incremental advertising.

(b)Wendy’s International includes advertising fund expense of $1,084 and $1,922 for the three and six months ended July 3, 2022, respectively, related to the Company’s funding of incremental advertising. In addition, Wendy’s International includes other international-related advertising expense of $880 and $1,522 for the three and six months ended July 3, 2022, respectively.

(c)Includes corporate overhead costs, such as employee compensation and related benefits.

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Basis of Presentation (Details) - USD ($) $ in Thousands	6 Months Ended
	Jul. 03, 2022	Jul. 04, 2021
Prior Period Adjustments Restatement
Cloud computing arrangements expenditures	$ (13,213)	$ (2,412)
Changes in operating assets and liabilities and other, net	$ (63,019)	(11,124)
Previously Reported
Prior Period Adjustments Restatement
Cloud computing arrangements expenditures		0
Changes in operating assets and liabilities and other, net		(13,536)
Restatement Adjustment
Prior Period Adjustments Restatement
Cloud computing arrangements expenditures		(2,412)
Changes in operating assets and liabilities and other, net		$ 2,412

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Revenue Disaggregation of Revenue (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jul. 03, 2022	Jul. 04, 2021	Jul. 03, 2022	Jul. 04, 2021
Disaggregation of Revenue
Franchise rental income	$ 58,610	$ 60,868	$ 116,481	$ 119,744
Total revenues	537,783	493,337	1,026,426	953,540
Sales at Company-operated restaurants
Disaggregation of Revenue
Revenue from Contract with Customer, Excluding Assessed Tax	230,869	193,525	440,144	382,582
Franchise royalty revenue
Disaggregation of Revenue
Revenue from Contract with Customer, Excluding Assessed Tax	125,013	119,566	236,758	227,900
Franchise fees
Disaggregation of Revenue
Revenue from Contract with Customer, Excluding Assessed Tax	18,423	17,095	35,654	31,591
Advertising funds revenue
Disaggregation of Revenue
Revenue from Contract with Customer, Excluding Assessed Tax	104,868	102,283	197,389	191,723
Wendy's U.S.
Disaggregation of Revenue
Franchise rental income	0	0	0	0
Total revenues	450,440	409,843	857,751	791,797
Wendy's U.S. | Sales at Company-operated restaurants
Disaggregation of Revenue
Revenue from Contract with Customer, Excluding Assessed Tax	227,903	193,279	434,404	382,336
Wendy's U.S. | Franchise royalty revenue
Disaggregation of Revenue
Revenue from Contract with Customer, Excluding Assessed Tax	108,872	106,006	206,792	202,770
Wendy's U.S. | Franchise fees
Disaggregation of Revenue
Revenue from Contract with Customer, Excluding Assessed Tax	15,986	14,331	31,391	26,261
Wendy's U.S. | Advertising funds revenue
Disaggregation of Revenue
Revenue from Contract with Customer, Excluding Assessed Tax	97,679	96,227	185,164	180,430
Wendy's International
Disaggregation of Revenue
Franchise rental income	0	0	0	0
Total revenues	27,463	21,316	50,369	39,566
Wendy's International | Sales at Company-operated restaurants
Disaggregation of Revenue
Revenue from Contract with Customer, Excluding Assessed Tax	2,966	246	5,740	246
Wendy's International | Franchise royalty revenue
Disaggregation of Revenue
Revenue from Contract with Customer, Excluding Assessed Tax	16,141	13,560	29,966	25,130
Wendy's International | Franchise fees
Disaggregation of Revenue
Revenue from Contract with Customer, Excluding Assessed Tax	1,167	1,454	2,438	2,897
Wendy's International | Advertising funds revenue
Disaggregation of Revenue
Revenue from Contract with Customer, Excluding Assessed Tax	7,189	6,056	12,225	11,293
Global Real Estate & Development
Disaggregation of Revenue
Franchise rental income	58,610	60,868	116,481	119,744
Total revenues	59,880	62,178	118,306	122,177
Global Real Estate & Development | Sales at Company-operated restaurants
Disaggregation of Revenue
Revenue from Contract with Customer, Excluding Assessed Tax	0	0	0	0
Global Real Estate & Development | Franchise royalty revenue
Disaggregation of Revenue
Revenue from Contract with Customer, Excluding Assessed Tax	0	0	0	0
Global Real Estate & Development | Franchise fees
Disaggregation of Revenue
Revenue from Contract with Customer, Excluding Assessed Tax	1,270	1,310	1,825	2,433
Global Real Estate & Development | Advertising funds revenue
Disaggregation of Revenue
Revenue from Contract with Customer, Excluding Assessed Tax	$ 0	$ 0	$ 0	$ 0

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Revenue Contract Balances (Details) - USD ($) $ in Thousands	6 Months Ended
	Jul. 03, 2022	Jul. 04, 2021	Jan. 02, 2022
Contract balances
Deferred franchise fees at beginning of period	$ 97,186	$ 97,785
Revenue recognized during the period	(5,037)	(6,845)
New deferrals due to cash received and other	6,959	7,469
Deferred franchise fees at end of period	99,108	$ 98,409
Deferred franchise fees, current	9,862		$ 9,084
Deferred franchise fees, noncurrent	89,246		88,102
Accounts and notes receivable, net | Short-term Contract with Customer
Contract balances
Receivables, Net, Current	57,838		49,168
Advertising funds restricted assets | Short-term Contract with Customer
Contract balances
Receivables, Net, Current	$ 66,918		$ 65,497

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Revenue Remaining Performance Obligation (Details) $ in Thousands	Jul. 03, 2022 USD ($)
Revenue, Remaining Performance Obligation
Revenue, Remaining Performance Obligation, Amount	$ 99,108
2022
Revenue, Remaining Performance Obligation
Revenue, Remaining Performance Obligation, Amount	6,831
2023
Revenue, Remaining Performance Obligation
Revenue, Remaining Performance Obligation, Amount	6,440
2024
Revenue, Remaining Performance Obligation
Revenue, Remaining Performance Obligation, Amount	6,260
2025
Revenue, Remaining Performance Obligation
Revenue, Remaining Performance Obligation, Amount	6,084
2026
Revenue, Remaining Performance Obligation
Revenue, Remaining Performance Obligation, Amount	5,975
Thereafter
Revenue, Remaining Performance Obligation
Revenue, Remaining Performance Obligation, Amount	$ 67,518

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Acquisitions (Details) - Acquisitions $ in Thousands	3 Months Ended	6 Months Ended		12 Months Ended
	Apr. 03, 2022 USD ($)	Jul. 03, 2022 number_of_restaurants	Jul. 04, 2021 number_of_restaurants	Jan. 02, 2022 USD ($) number_of_restaurants
Business Acquisition
Restaurants acquired from franchisees | number_of_restaurants		0	0	93
Total consideration paid, net of cash received				$ 127,948
Adjustments to the fair values of identifiable net assets related to prior acquisition	$ 0

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System Optimization Gains, Net Summary of Disposition Activity (Details) $ in Thousands	3 Months Ended		6 Months Ended
	Jul. 03, 2022 USD ($) number_of_restaurants	Jul. 04, 2021 USD ($) number_of_restaurants	Jul. 03, 2022 USD ($) number_of_restaurants	Jul. 04, 2021 USD ($) number_of_restaurants	Jan. 01, 2017
System optimization gains, net
Company-operated restaurant ownership percentage					5.00%
Proceeds from sales of restaurants			$ 1,016	$ 50,531
Gain on sales-type leases	$ 1,677	$ 1,627	2,157	3,539
System optimization gains, net	$ 152	$ 30,766	$ 3,686	$ 31,282
Sale of franchise-operated restaurants to franchisees
System optimization gains, net
Number of restaurants sold to franchisees | number_of_restaurants			46	19
Sale of company-operated restaurants to franchisees
System optimization gains, net
Number of restaurants sold to franchisees | number_of_restaurants	0	47	0	47
Proceeds from sales of restaurants	$ 0	$ 50,518	$ 0	$ 50,518
Net Assets Sold	0	(16,939)	0	(16,939)
Goodwill related to sales of restaurants	0	(4,847)	0	(4,847)
Net unfavorable leases	0	(2,939)	0	(2,939)
Gain on sales-type leases	0	7,156	0	7,156
Other	0	(2,148)	0	(2,148)
Gain on sales of restaurants, net, before post-closing adjustments	0	30,801	0	30,801
Post closing adjustments on sales of restaurants	75	0	3,522	515
System optimization gains, net	75	30,801	3,522	31,316
Favorable lease		3,799		3,799
Unfavorable lease		6,738		6,738
Deferred gain on sale of property		3,500		3,500
Sale of other assets
System optimization gains, net
Proceeds from sales of restaurants	690	10	858	13
System optimization gains, net	77	$ (35)	164	$ (34)
Sale of manhattan company-operated restaurants to franchisees note receivable
System optimization gains, net
Proceeds from sales of restaurants	$ 63		$ 158

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System Optimization Gains, Net Assets Held for Sale (Details) - USD ($) $ in Thousands	Jul. 03, 2022	Jan. 02, 2022
Other assets held for sale
Long lived assets held for sale
Assets held for sale	$ 3,754	$ 3,541

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Reorganization and Realignment Costs Summary (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jul. 03, 2022	Jul. 04, 2021	Jul. 03, 2022	Jul. 04, 2021
Restructuring Cost and Reserve
Reorganization and realignment costs	$ 156	$ 2,102	$ 620	$ 7,036
System Optimization Initiative
Restructuring Cost and Reserve
Reorganization and realignment costs	134	897	541	5,575
Other Reorganization and Realignment Plans
Restructuring Cost and Reserve
Reorganization and realignment costs	$ 22	$ 1,205	$ 79	$ 1,461

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Reorganization and Realignment Costs System Optimization Costs (Details) $ in Thousands	3 Months Ended		6 Months Ended		12 Months Ended
	Jul. 03, 2022 USD ($)	Jul. 04, 2021 USD ($)	Jul. 03, 2022 USD ($) number_of_restaurants	Jul. 04, 2021 USD ($) number_of_restaurants	Jan. 02, 2022 number_of_restaurants
Restructuring Cost and Reserve
Reorganization and realignment costs	$ 156	$ 2,102	$ 620	$ 7,036
Acquisitions
Restructuring Cost and Reserve
Restaurants acquired from franchisees | number_of_restaurants			0	0	93
System Optimization Initiative
Restructuring Cost and Reserve
Reorganization and realignment costs	134	897	$ 541	$ 5,575
Restructuring and Related Cost, Expected Benefit Remaining	700		700
Restructuring and Related Cost, Incurred Cost	117	1,165	507	2,754
Restructuring and Related Cost, Cost Incurred to Date	50,700		50,700
Restructuring Charges, Incurred to Date	84,001		84,001
System Optimization Initiative | Acquisitions
Restructuring Cost and Reserve
Restaurants acquired from franchisees | number_of_restaurants					93
System Optimization Initiative | Severance and related employee costs
Restructuring Cost and Reserve
Restructuring and Related Cost, Incurred Cost	0	661	0	661
Restructuring and Related Cost, Cost Incurred to Date	18,898		18,898
System Optimization Initiative | Professional fees
Restructuring Cost and Reserve
Restructuring and Related Cost, Incurred Cost	80	504	374	739
Restructuring and Related Cost, Cost Incurred to Date	24,051		24,051
System Optimization Initiative | Other
Restructuring Cost and Reserve
Restructuring and Related Cost, Incurred Cost	37	0	133	1,354
Restructuring and Related Cost, Cost Incurred to Date	7,751		7,751
System Optimization Initiative | Other | NPC Transaction Fees
Restructuring Cost and Reserve
Restructuring and Related Cost, Incurred Cost			1,350
System Optimization Initiative | Accelerated depreciation and amortization
Restructuring Cost and Reserve
Restructuring and Related Cost, Incurred Cost	0	0	0	0
Restructuring and Related Cost, Cost Incurred to Date	25,398		25,398
System Optimization Initiative | NPC lease termination costs
Restructuring Cost and Reserve
Restructuring and Related Cost, Incurred Cost	17	(268)	34	2,821
Restructuring and Related Cost, Cost Incurred to Date	2,890		2,890
System Optimization Initiative | NPC lease termination costs | Write-Off of Lease Assets
Restructuring Cost and Reserve
Restructuring and Related Cost, Incurred Cost			1,341
System Optimization Initiative | NPC lease termination costs | Lease Termination Fees
Restructuring Cost and Reserve
Restructuring and Related Cost, Incurred Cost			1,480
System Optimization Initiative | Share-based compensation
Restructuring Cost and Reserve
Restructuring and Related Cost, Incurred Cost	0	$ 0	0	$ 0
Restructuring and Related Cost, Cost Incurred to Date	$ 5,013		$ 5,013

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Reorganization and Realignment Costs System Optimization Accrual Rollforward (Details) - System Optimization Initiative - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jul. 03, 2022	Jul. 04, 2021	Jul. 03, 2022	Jul. 04, 2021
Restructuring Cost and Reserve
Beginning balance			$ 0	$ 1,230
Charges	$ 117	$ 1,165	507	2,754
Payments			(507)	(3,984)
Ending balance	0	0	0	0
Severance and related employee costs
Restructuring Cost and Reserve
Beginning balance				0
Charges	0	661	0	661
Payments				(661)
Ending balance		0		0
Professional fees
Restructuring Cost and Reserve
Beginning balance			0	1,230
Charges	80	504	374	739
Payments			(374)	(1,969)
Ending balance	0	0	0	0
Other
Restructuring Cost and Reserve
Beginning balance			0	0
Charges	37	0	133	1,354
Payments			(133)	(1,354)
Ending balance	$ 0	$ 0	$ 0	$ 0

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Investments Carrying Value of Investments (Details) - USD ($) $ in Thousands	Jul. 03, 2022	Jan. 02, 2022
Schedule of Investments
Equity method investments	$ 38,088	$ 39,870
Other investments in equity securities	12,107	10,000
Investments	$ 50,195	$ 49,870

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Investments Equity Method Investments (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jul. 03, 2022	Jul. 04, 2021	Jul. 03, 2022	Jul. 04, 2021
Schedule of Equity Method Investments
Balance at beginning of period			$ 39,870
Foreign currency translation adjustment included in “Other comprehensive (loss) income” and other	$ (7,455)	$ 3,347	(6,337)	$ 5,567
Balance at end of period	$ 38,088		$ 38,088
TimWen
Schedule of Equity Method Investments
Equity Method Investment, Ownership Percentage	50.00%		50.00%
Equity Method Investment, Purchase Price Adjustment, Amortization Period			21 years	21 years
Brazil JV
Schedule of Equity Method Investments
Equity Method Investment, Ownership Percentage	20.00%		20.00%
TimWen and Brazil JV
Schedule of Equity Method Investments
Balance at beginning of period			$ 39,870	$ 44,574
Equity in earnings for the period			5,736	4,921
Amortization of purchase price adjustments			(1,455)	(1,658)
Equity in earnings for the period, net of amortization of purchase price adjustments			4,281	3,263
Distributions received			(5,389)	(5,617)
Foreign currency translation adjustment included in “Other comprehensive (loss) income” and other			(674)	1,456
Balance at end of period	$ 38,088	$ 43,676	$ 38,088	$ 43,676

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Investments Other Investments in Equity Securities (Details) - Other investments in equity securities - USD ($) $ in Thousands	6 Months Ended	12 Months Ended
	Jul. 03, 2022	Jan. 02, 2022
Payments for investments		$ 10,000
Recognized gain on investment, observable price change for a similar investment of same issuer	$ 2,107

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Long-Term Debt Schedule of Long Term Debt (Details) - USD ($) $ in Thousands	Jul. 03, 2022	Jan. 02, 2022
Debt Instrument
Unamortized debt issuance costs	$ (44,105)	$ (37,009)
Total debt	2,862,040	2,380,666
Less amounts payable within one year	(29,250)	(24,250)
Total long-term debt	2,832,790	2,356,416
Series 2022-1 Class A-2-I Notes
Debt Instrument
Senior Notes	$ 100,000
Debt Instrument, Interest Rate, Stated Percentage	4.236%
Series 2022-1 Class A-2-II Notes
Debt Instrument
Senior Notes	$ 400,000
Debt Instrument, Interest Rate, Stated Percentage	4.535%
Series 2021-1 Class A-2-I Notes
Debt Instrument
Senior Notes	$ 445,500	$ 447,750
Debt Instrument, Interest Rate, Stated Percentage	2.37%	2.37%
Series 2021-1 Class A-2-II Notes
Debt Instrument
Senior Notes	$ 643,500	$ 646,750
Debt Instrument, Interest Rate, Stated Percentage	2.775%	2.775%
Series 2019-1 Class A-2-I Notes
Debt Instrument
Senior Notes	$ 366,000	$ 368,000
Debt Instrument, Interest Rate, Stated Percentage	3.783%	3.783%
Series 2019-1 Class A-2-II Notes
Debt Instrument
Senior Notes	$ 411,750	$ 414,000
Debt Instrument, Interest Rate, Stated Percentage	4.08%	4.08%
Series 2018-1 Class A-2-II Notes
Debt Instrument
Senior Notes	$ 453,625	$ 456,000
Debt Instrument, Interest Rate, Stated Percentage	3.884%	3.884%
7% debentures
Debt Instrument
7% debentures	$ 85,770	$ 85,175
Debt Instrument, Interest Rate, Stated Percentage	7.00%	7.00%

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Long-Term Debt Senior Notes (Details) $ in Thousands	Jul. 03, 2022 USD ($)
Series 2022-1 Class A-2-I Notes
Debt Instrument
Debt Instrument, Face Amount	$ 100,000
Series 2022-1 Class A-2-II Notes
Debt Instrument
Debt Instrument, Face Amount	400,000
Series 2022-1 Class A-2 Notes
Debt Instrument
Long-term Debt, Maturities, Repayments of Principal Annually Through 2022	2,500
Long-term Debt, Maturities, Repayments of Principal Annually from 2023 through 2028	5,000
Long-term Debt, Maturities, Repayments of Principal Annually in 2029	97,500
Long-term Debt, Maturities, Repayments of Principal Annually from 2030 through 2031	4,000
Long-term Debt, Maturities, Repayments of Principal Annually in 2032	362,000
Debt Issuance Costs, Gross	10,232
Series 2021-1 Class A-1 Notes | Line of Credit
Debt Instrument
Line of Credit Facility, Maximum Borrowing Capacity	300,000
Line of Credit, Outstanding, Amount	$ 0

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Fair Value Measurements Financial Instruments (Details) - USD ($) $ in Thousands	Jul. 03, 2022	Jan. 02, 2022
Fair Value, Balance Sheet Grouping, Financial Statement Captions
Other investments in equity securities	$ 12,107	$ 10,000
Series 2022-1 Class A-2-I Notes
Fair Value, Balance Sheet Grouping, Financial Statement Captions
Debt Instrument, Interest Rate, Stated Percentage	4.236%
Series 2022-1 Class A-2-II Notes
Fair Value, Balance Sheet Grouping, Financial Statement Captions
Debt Instrument, Interest Rate, Stated Percentage	4.535%
Series 2021-1 Class A-2-I Notes
Fair Value, Balance Sheet Grouping, Financial Statement Captions
Debt Instrument, Interest Rate, Stated Percentage	2.37%	2.37%
Series 2021-1 Class A-2-II Notes
Fair Value, Balance Sheet Grouping, Financial Statement Captions
Debt Instrument, Interest Rate, Stated Percentage	2.775%	2.775%
Series 2019-1 Class A-2-I Notes
Fair Value, Balance Sheet Grouping, Financial Statement Captions
Debt Instrument, Interest Rate, Stated Percentage	3.783%	3.783%
Series 2019-1 Class A-2-II Notes
Fair Value, Balance Sheet Grouping, Financial Statement Captions
Debt Instrument, Interest Rate, Stated Percentage	4.08%	4.08%
Series 2018-1 Class A-2-II Notes
Fair Value, Balance Sheet Grouping, Financial Statement Captions
Debt Instrument, Interest Rate, Stated Percentage	3.884%	3.884%
7% debentures
Fair Value, Balance Sheet Grouping, Financial Statement Captions
Debt Instrument, Interest Rate, Stated Percentage	7.00%	7.00%
Reported Value Measurement
Fair Value, Balance Sheet Grouping, Financial Statement Captions
Cash equivalents	$ 415,679	$ 0
Other investments in equity securities	12,107	10,000
Reported Value Measurement | Series 2022-1 Class A-2-I Notes
Fair Value, Balance Sheet Grouping, Financial Statement Captions
Debt instrument	100,000
Reported Value Measurement | Series 2022-1 Class A-2-II Notes
Fair Value, Balance Sheet Grouping, Financial Statement Captions
Debt instrument	400,000
Reported Value Measurement | Series 2021-1 Class A-2-I Notes
Fair Value, Balance Sheet Grouping, Financial Statement Captions
Debt instrument	445,500	447,750
Reported Value Measurement | Series 2021-1 Class A-2-II Notes
Fair Value, Balance Sheet Grouping, Financial Statement Captions
Debt instrument	643,500	646,750
Reported Value Measurement | Series 2019-1 Class A-2-I Notes
Fair Value, Balance Sheet Grouping, Financial Statement Captions
Debt instrument	366,000	368,000
Reported Value Measurement | Series 2019-1 Class A-2-II Notes
Fair Value, Balance Sheet Grouping, Financial Statement Captions
Debt instrument	411,750	414,000
Reported Value Measurement | Series 2018-1 Class A-2-II Notes
Fair Value, Balance Sheet Grouping, Financial Statement Captions
Debt instrument	453,625	456,000
Reported Value Measurement | 7% debentures
Fair Value, Balance Sheet Grouping, Financial Statement Captions
Debt instrument	85,770	85,175
Estimate of Fair Value Measurement | Fair Value, Inputs, Level 1
Fair Value, Balance Sheet Grouping, Financial Statement Captions
Cash equivalents	415,679	0
Estimate of Fair Value Measurement | Fair Value, Inputs, Level 2
Fair Value, Balance Sheet Grouping, Financial Statement Captions
Other investments in equity securities	12,107	10,000
Estimate of Fair Value Measurement | Series 2022-1 Class A-2-I Notes | Fair Value, Inputs, Level 2
Fair Value, Balance Sheet Grouping, Financial Statement Captions
Debt instrument	94,800
Estimate of Fair Value Measurement | Series 2022-1 Class A-2-II Notes | Fair Value, Inputs, Level 2
Fair Value, Balance Sheet Grouping, Financial Statement Captions
Debt instrument	376,000
Estimate of Fair Value Measurement | Series 2021-1 Class A-2-I Notes | Fair Value, Inputs, Level 2
Fair Value, Balance Sheet Grouping, Financial Statement Captions
Debt instrument	379,254	439,283
Estimate of Fair Value Measurement | Series 2021-1 Class A-2-II Notes | Fair Value, Inputs, Level 2
Fair Value, Balance Sheet Grouping, Financial Statement Captions
Debt instrument	533,912	642,352
Estimate of Fair Value Measurement | Series 2019-1 Class A-2-I Notes | Fair Value, Inputs, Level 2
Fair Value, Balance Sheet Grouping, Financial Statement Captions
Debt instrument	348,322	381,579
Estimate of Fair Value Measurement | Series 2019-1 Class A-2-II Notes | Fair Value, Inputs, Level 2
Fair Value, Balance Sheet Grouping, Financial Statement Captions
Debt instrument	384,122	439,792
Estimate of Fair Value Measurement | Series 2018-1 Class A-2-II Notes | Fair Value, Inputs, Level 2
Fair Value, Balance Sheet Grouping, Financial Statement Captions
Debt instrument	426,816	473,693
Estimate of Fair Value Measurement | 7% debentures | Fair Value, Inputs, Level 2
Fair Value, Balance Sheet Grouping, Financial Statement Captions
Debt instrument	$ 91,467	$ 101,142

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Fair Value Measurements Non-Recurring Fair Value Measurements (Details) - Fair Value, Measurements, Nonrecurring - USD ($) $ in Thousands	Jul. 03, 2022	Jan. 02, 2022
Fair Value, Assets and Liabilities Measured on Nonrecurring Basis
Assets Held and used, Long Lived, Fair Value Disclosure	$ 952	$ 1,618
Assets Held for sale, Long Lived, Fair Value Disclosure	2,275	371
Total	3,227	1,989
Fair Value, Inputs, Level 1
Fair Value, Assets and Liabilities Measured on Nonrecurring Basis
Assets Held and used, Long Lived, Fair Value Disclosure	0	0
Assets Held for sale, Long Lived, Fair Value Disclosure	0	0
Total	0	0
Fair Value, Inputs, Level 2
Fair Value, Assets and Liabilities Measured on Nonrecurring Basis
Assets Held and used, Long Lived, Fair Value Disclosure	0	0
Assets Held for sale, Long Lived, Fair Value Disclosure	0	0
Total	0	0
Fair Value, Inputs, Level 3
Fair Value, Assets and Liabilities Measured on Nonrecurring Basis
Assets Held and used, Long Lived, Fair Value Disclosure	952	1,618
Assets Held for sale, Long Lived, Fair Value Disclosure	2,275	371
Total	$ 3,227	$ 1,989

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Impairment of Long-Lived Assets (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jul. 03, 2022	Jul. 04, 2021	Jul. 03, 2022	Jul. 04, 2021
Impairment of Long-Lived Assets
Impairment of long-lived assets	$ 1,860	$ 630	$ 2,476	$ 1,265
Company-operated restaurants
Impairment of Long-Lived Assets
Impairment of long-lived assets	1,708	488	2,075	934
Restaurants leased or subleased to franchisees
Impairment of Long-Lived Assets
Impairment of long-lived assets	0	0	194	189
Surplus properties
Impairment of Long-Lived Assets
Impairment of long-lived assets	$ 152	$ 142	$ 207	$ 142

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Income Taxes (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jul. 03, 2022	Jul. 04, 2021	Jul. 03, 2022	Jul. 04, 2021	Jan. 02, 2022
Effective Income Tax Rate	26.40%	18.60%	26.40%	20.80%
Effective Income Tax Rate Reconciliation, at Federal Statutory Income Tax Rate, Percent	21.00%	21.00%	21.00%	21.00%
Significant changes to unrecognized tax benefits	$ 0		$ 0
Significant changes to interest and penalties related to unrecognized tax benefits	0		0
Reasonably possible decrease in unrecognized tax benefits	936		936
Income Taxes Receivable, Current	8,266		8,266		$ 11,901
Income Taxes Receivable, Noncurrent	$ 0		$ 0		$ 0

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Net Income Per Share (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands	3 Months Ended				6 Months Ended
	Jul. 03, 2022	Apr. 03, 2022	Jul. 04, 2021	Apr. 04, 2021	Jul. 03, 2022	Jul. 04, 2021
Earnings Per Share [Abstract]
Net income	$ 48,151	$ 37,402	$ 65,724	$ 41,366	$ 85,553	$ 107,090
Weighted average basic shares outstanding	213,673		221,874		214,646	222,604
Dilutive effect of stock options and restricted shares	1,569		3,526		2,058	3,459
Weighted average diluted shares outstanding	215,242		225,400		216,704	226,063
Earnings Per Share, Basic	$ 0.23		$ 0.30		$ 0.40	$ 0.48
Earnings Per Share, Diluted	$ 0.22		$ 0.29		$ 0.39	$ 0.47
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount	5,538		1,825		4,417	1,847

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Stockholders' Equity Dividends (Details) - $ / shares	3 Months Ended
	Jul. 03, 2022	Apr. 03, 2022	Jul. 04, 2021	Apr. 04, 2021
Common Stock, Dividends, Per Share, Cash Paid	$ 0.125	$ 0.125	$ 0.10	$ 0.09

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Stockholders' Equity Repurchases of Common Stock (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands			1 Months Ended	4 Months Ended	6 Months Ended
	Feb. 28, 2022	Nov. 30, 2021	Aug. 09, 2022	Feb. 28, 2022	Jul. 03, 2022	Jul. 04, 2021	Apr. 01, 2022	Aug. 31, 2021	May 31, 2021	Feb. 29, 2020
February 2022 Share Repurchase Program
Equity, Class of Treasury Stock
Stock Repurchase Program, Authorized Amount	$ 100,000			$ 100,000
April 2022 Share Repurchase Program
Equity, Class of Treasury Stock
Stock Repurchase Program, Authorized Amount							$ 150,000
February 2022 and April 2022 Share Repurchase Program
Equity, Class of Treasury Stock
Stock Repurchase Program, Authorized Amount							$ 250,000
Treasury Stock, Shares, Acquired					2,759
Treasury Stock, Value, Acquired, Cost Method, excluding Commissions					$ 51,911
Stock Repurchase Program, Cost Incurred					39
Stock Repurchase Program, Remaining Authorized Repurchase Amount					$ 198,089
February 2022 and April 2022 Share Repurchase Program | Subsequent Event
Equity, Class of Treasury Stock
Treasury Stock, Shares, Acquired			0
February 2020 Share Repurchase Program
Equity, Class of Treasury Stock
Stock Repurchase Program, Authorized Amount										$ 100,000
May 2021 Share Repurchase Program
Equity, Class of Treasury Stock
Stock Repurchase Program, Authorized Amount									$ 50,000
August 2021 Share Repurchase Program
Equity, Class of Treasury Stock
Stock Repurchase Program, Authorized Amount								$ 70,000
November 2021 Share Repurchase Program
Equity, Class of Treasury Stock
Stock Repurchase Program, Authorized Amount		$ 80,000
February 2020, May 2021, August 2021 and November 2021 Share Repurchase Program
Equity, Class of Treasury Stock
Stock Repurchase Program, Authorized Amount		300,000
2021 Accelerated Share Repurchase Program
Equity, Class of Treasury Stock
Stock Repurchase Program, Authorized Amount		$ 125,000
Treasury Stock, Shares, Acquired	715	4,910		5,625
Initial Shares Delivered Under ASR Agreement Percentage		85.00%
Treasury Stock Acquired, Average Cost Per Share				$ 22.22
February 2020 and May 2021 Share Repurchase Program
Equity, Class of Treasury Stock
Treasury Stock, Shares, Acquired						3,956
Treasury Stock, Value, Acquired, Cost Method, excluding Commissions						$ 83,320
Stock Repurchase Program, Repurchase Accrual						440
Stock Repurchase Program, Cost Incurred						$ 55

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Stockholders' Equity Accumulated Other Comprehensive Loss (Details) - USD ($) $ in Thousands	3 Months Ended				6 Months Ended
	Jul. 03, 2022	Apr. 03, 2022	Jul. 04, 2021	Apr. 04, 2021	Jul. 03, 2022	Jul. 04, 2021
Accumulated Other Comprehensive Loss
Balance at beginning of period		$ (48,200)			$ (48,200)
Foreign currency translation	$ (7,455)	1,118	$ 3,347	$ 2,220	(6,337)	$ 5,567
Balance at end of period	(54,537)				(54,537)
Foreign Currency Translation
Accumulated Other Comprehensive Loss
Balance at beginning of period		$ (48,200)		$ (49,641)	(48,200)	(49,641)
Foreign currency translation					(6,337)	5,567
Balance at end of period	$ (54,537)		$ (44,074)		$ (54,537)	$ (44,074)

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Leases Lessee Lease Narrative (Details)	Jul. 03, 2022 number_of_restaurants
Lessee, Lease, Description
Number of restaurants	7,040
Entity Operated Units
Lessee, Lease, Description
Number of restaurants	411
Land And Building - Company Owned | Entity Operated Units
Lessee, Lease, Description
Number of restaurants	157
Building - Company Owned; Land - Leased | Entity Operated Units
Lessee, Lease, Description
Number of restaurants	143
Land And Building - Leased | Entity Operated Units
Lessee, Lease, Description
Number of restaurants	111

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Leases Lessor Lease Narrative (Details)	Jul. 03, 2022 number_of_restaurants
Lessor, Lease, Description
Number of restaurants	7,040
Land And Building - Company Owned | Franchised Units
Lessor, Lease, Description
Number of restaurants	489
Land And Building - Leased | Franchised Units
Lessor, Lease, Description
Number of restaurants	1,211

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Leases Components of Lease Cost (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jul. 03, 2022	Jul. 04, 2021	Jul. 03, 2022	Jul. 04, 2021
Lease, Cost
Amortization of finance lease assets	$ 4,106	$ 3,251	$ 8,170	$ 6,759
Interest on finance lease liabilities	10,693	10,267	21,338	20,560
Total finance lease cost	14,799	13,518	29,508	27,319
Operating lease cost	22,324	23,012	42,985	46,373
Variable lease cost	16,456	16,583	31,259	31,771
Short-term lease cost	1,405	1,270	2,838	2,596
Total operating lease cost	40,185	40,865	77,082	80,740
Total lease cost	54,984	54,383	106,590	108,059
Franchise rental expense
Lease, Cost
Total operating lease cost	32,071	34,063	60,996	66,615
Cost of sales
Lease, Cost
Total operating lease cost	7,479	6,111	14,773	12,792
Executory costs paid by lessee
Lease, Cost
Variable lease cost	$ 9,245	$ 10,087	$ 18,853	$ 20,150

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Leases Components of Lease Income (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jul. 03, 2022	Jul. 04, 2021	Jul. 03, 2022	Jul. 04, 2021
Lessor Lease Income
Sales-type leases, selling profit	$ 1,677	$ 1,627	$ 2,157	$ 3,539
Sales-type and direct-financing leases, interest income	7,753	7,586	15,493	15,075
Operating lease income	42,174	44,356	85,488	88,478
Variable lease income	16,436	16,512	30,993	31,266
Franchise rental income	58,610	60,868	116,481	119,744
Sublease income	43,689	45,245	86,854	88,495
Executory costs paid to lessor
Lessor Lease Income
Variable lease income	$ 9,250	$ 10,195	$ 18,785	$ 20,069

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Supplemental Non-Cash Investing and Financing Activities (Details) - USD ($) $ in Thousands	6 Months Ended
	Jul. 03, 2022	Jul. 04, 2021
Cash Flow, Noncash Investing and Financing Activities Disclosure [Abstract]
Capital expenditures included in accounts payable	$ 5,955	$ 7,242
Finance leases	$ 18,984	$ 30,863

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Reconciliation of Cash, Cash Equivalents and Restricted Cash at End of Period (Details) - USD ($) $ in Thousands	Jul. 03, 2022	Jan. 02, 2022	Jul. 04, 2021	Jan. 03, 2021
Additional Cash Flow Elements and Supplemental Cash Flow Information [Abstract]
Cash and cash equivalents	$ 700,813	$ 249,438
Restricted cash	33,997	27,535
Restricted cash, included in Advertising funds restricted assets	61,838	89,993
Total cash, cash equivalents and restricted cash	$ 796,648	$ 366,966	$ 640,156	$ 418,241

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Franchise Development Fund (Details) $ in Thousands	Aug. 31, 2021 USD ($) number_of_restaurants
Franchise Development Fund
Build to Suit Development Fund, Expected Cost | $	$ 100,000
Minimum
Franchise Development Fund
Build to Suit Development Fund, Expected Number of Restaurants	80
Maximum
Franchise Development Fund
Build to Suit Development Fund, Expected Number of Restaurants	90

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Transactions with Related Parties (Details) $ in Thousands	6 Months Ended
	Jul. 03, 2022 USD ($) number_of_restaurants	Jul. 04, 2021 USD ($)	Jan. 02, 2022 USD ($)
Related Party Transaction
Number of Restaurants | number_of_restaurants	7,040
TimWen | Franchise Rental Expense
Related Party Transaction
Related Party Transaction, Expenses from Transactions with Related Party	$ 9,601	$ 8,817
TimWen | General and administrative | Management Fee Income
Related Party Transaction
Related Party Transaction, Other Income from Transactions with Related Party	111	110
Yellow Cab | Royalty, Advertising Fund, Lease and Other Income
Related Party Transaction
Related Party Transaction, Other Income from Transactions with Related Party	6,476	$ 4,353
Yellow Cab | Accounts and notes receivable, net and Advertising funds restricted assets | Royalty, Advertising Fund, Lease and Other Income
Related Party Transaction
Accounts Receivable, Related Parties, Current	$ 1,046		$ 974
Yellow Cab | Franchised Units
Related Party Transaction
Number of Restaurants | number_of_restaurants	82

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Guarantees and Other Commitments and Contingencies Lease Guarantees (Details) $ in Thousands	Jul. 03, 2022 USD ($)
Property Lease Guarantee
Guarantor Obligations
Guarantor Obligations, Maximum Exposure, Undiscounted	$ 88,778

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Guarantees and Other Commitments and Contingencies Letters of Credit (Details) $ in Thousands	Jul. 03, 2022 USD ($)
Guarantor Obligations
Letters of Credit Outstanding, Amount	$ 28,633

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Segment Information Reconciliation of Revenue from Segments to Consolidated (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jul. 03, 2022	Jul. 04, 2021	Jul. 03, 2022	Jul. 04, 2021
Segment Reporting, Revenue Reconciling Item
Total revenues	$ 537,783	$ 493,337	$ 1,026,426	$ 953,540
Wendy's U.S.
Segment Reporting, Revenue Reconciling Item
Total revenues	450,440	409,843	857,751	791,797
Wendy's International
Segment Reporting, Revenue Reconciling Item
Total revenues	27,463	21,316	50,369	39,566
Global Real Estate & Development
Segment Reporting, Revenue Reconciling Item
Total revenues	$ 59,880	$ 62,178	$ 118,306	$ 122,177

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Segment Information Reconciliation of Profit from Segments to Consolidated (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jul. 03, 2022	Jul. 04, 2021	Jul. 03, 2022	Jul. 04, 2021
Segment Reporting, Reconciling Item for Profit from Segment to Consolidated
Segment profit	$ 96,281	$ 126,746	$ 171,162	$ 209,868
Unallocated franchise support and other costs	(9,912)	(8,885)	(21,728)	(16,571)
Advertising funds deficit	(1,375)	(1,602)	(2,618)	(2,866)
Unallocated general and administrative	(61,637)	(63,114)	(123,983)	(115,736)
Depreciation and amortization	(33,428)	(30,761)	(66,659)	(62,303)
System optimization gains, net	152	30,766	3,686	31,282
Reorganization and realignment costs	(156)	(2,102)	(620)	(7,036)
Impairment on long-lived assets	(1,860)	(630)	(2,476)	(1,265)
Unallocated other operating income, net	5,673	4,232	8,639	7,708
Interest expense, net	(32,125)	(28,204)	(58,490)	(56,990)
Loss on early extinguishment of debt	0	(17,917)	0	(17,917)
Investment (loss) income, net	(4)	3	2,107	6
Other income, net	1,238	158	1,445	284
Income before income taxes	65,390	80,786	116,224	135,251
Corporate and Other
Segment Reporting, Reconciling Item for Profit from Segment to Consolidated
Unallocated franchise support and other costs	0	0	6	0
Unallocated general and administrative	(30,989)	(28,864)	(61,994)	(53,971)
Unallocated other operating income, net	305	192	321	256
Operating Segments
Segment Reporting, Reconciling Item for Profit from Segment to Consolidated
Segment profit	163,632	159,747	301,516	305,771
Operating Segments | Wendy's U.S.
Segment Reporting, Reconciling Item for Profit from Segment to Consolidated
Segment profit	126,999	126,650	231,823	238,737
Advertising funds deficit	(2,766)	(3,990)	(5,322)	(7,524)
Operating Segments | Wendy's International
Segment Reporting, Reconciling Item for Profit from Segment to Consolidated
Segment profit	9,350	6,528	14,803	14,212
Advertising funds deficit	(1,084)		(1,922)
Other international-related advertising expense	880		1,522
Operating Segments | Global Real Estate & Development
Segment Reporting, Reconciling Item for Profit from Segment to Consolidated
Segment profit	$ 27,283	$ 26,569	$ 54,890	$ 52,822